National Savings Certificate (NSC) – A Govt’s Backed Savings Scheme

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National Savings Certificate or NSC is a secure savings scheme introduced by the Government of India. The NSC scheme is available for all residents of India at all post-offices. There are no such age restrictions for buying NSC certificates. The current rate of interest of NSC (VIII issue), as of October 2020, is 6.8% per annum. The tenure of this savings scheme is five years. Before the maturity, the account can not be closed (excluding some exceptional cases). Comparatively, the interest rate of NSC is quite good than the bank's Fixed Deposit. The depositor can also get a TAX benefit up to Rs. 1,50,000 under section 80c of the Income-tax act.

Features of National Savings Certificate (NSC)

National Savings Certificate is undertaken by the Government of India. The scheme provides plenty of advantages:

• NSC is one of the best secure and risk-free savings schemes.
• There is no restriction or investment limit under NSC.
• One can buy NSC with a minimum value of 100 rupees.
• An individual can also have more than one National Savings Certificates.
• NSC is transferable
• As of now the returns of NSC is more than the bank's FDs.
• NSC can be transferred from one family member to another if the holder of the NSC account is deceased.
• TAX deduction up to Rs. 1.5 lakh. is available U.C. 80c Income-tax Act.

Eligibility criteria for National Savings Certificate (NSC)

The eligibility criteria for NSC must follow these criteria are described below:

Eligible 

• All Indian citizens are eligible to buy an NSC
• There is no age bar

Non-eligible

• A non-resident of India (NRIs) is not allowed
• Members of the Hindu undivided family are not allowed
• Trusts are not eligible for this scheme

Required documents for buying an NSC (National Savings Certificate)

The opening system is very easy. NSC can be purchased only through offline mode. The buyer needs to visit the nearest Post Office or Bank to buy this certificate. NSC can be bought using Cash or Cheque. However, if the amount is more than one lakh, then only Cheque is mandatory.  After purchasing, the buyer will receive a passbook from the authority as proof. The following documents are required to get a National Savings Certificate

• NSC application form
• Address proof (Aadhar card, ID card, Driving Licence, etc.)
• Identity proof (Aadhar card, ID card, Pan Card, Passport, etc.)
• Photograph
• Cheque, Cash, or Demand Draft.

Purchase amount limits in National Savings Certificate (NSC)

• One can purchase National Savings Certificate with as low as Rs. 100.00 and there is no maximum purchase amount limit.
• One can hold more than one certificate.

Tenure

The NSC gets matured after five years of purchase. After completion of 5 years certificate holder can reinvest the amount and as many times as he/ she likes.

Premature closure rules Under NSC

National Savings Certificate is generally locked for five years, however, the surrender of the certificate can be done in the following circumstances:    

• Death of the Certificate holder.
• Court order.

National Savings Certificate (NSC) – Interest-rate

The Government of India on 31st March 2020 announces a declaration to cut the interest rate of all schemes. As of now, the present rate of NSC is 6.8% per annum. For example, as of October 2020, the interest rate is 6.8%. If one invests Rs. 1,00,000 lakh for five years, then the maturity amount after five years will be Rs. 1,38,949 including Rs.38, 949 interest. 

NSC Online Maturity Calculator

Tax benefits under the National Savings Certificate (NSC)

There is no upper amount limit to have an NSC. However, section 80C allows tax exemption up to Rs 1.5 lakh under the Income Tax Act.

Interest received from NSC for the first four years is not taxable. But, the interest earned in the 5th year is taxable according to the subscriber's income tax slab.

Opening mode of National Savings Certificate

National Saving Certificate can have multi-owner and also can be operated singly or jointly. A minor with legal guardians can also buy this certificate. Based on its type, NSC can be divided into three types:

• Single holder type Certificate: The depositor or buyer will have to operate singly with a nomination (optional) facility or in a minor name. Both of holder and minor can add nominee. The maturity amount with interest will be returned to the account holder.
• Joint “A” type Certificate: This kind of certificate can be operated jointly. Both holder's signature is required in case of withdrawal, change of nominee. 
• Joint “B” type certificate: Both holders can operate the account individually. This kind of certificate is a mixture of Single holder type certificate and Joint “A” type certificate. The fund can be withdrawn by anyone after the maturity.

Nomination facility under NSC 

The holder may nominate any person during or after opening account of National Savings Certificate only in the following cases:

• The holder (may single or joint holder) of the National Savings Certificate can nominate a person at the time of purchasing a certificate on form1 or before the maturity on form 2. After the death of the certificate holder, the nominated person will become the owner of the certificate and the amount will be payable to that declared nominee.
• If the holder wants to nominate any person after opening the account, so that it may be possible by a single holder, joint holder, etc. Before maturity, an application Form 2 must be submitted to the post-master of post-office.

Loan against National Savings Certificate (NSC)

Being a Government-issued Certificate, NSC gives secure assurance to holders. Certificate holders can get loans against their certificates with an affordable rate of interest. Most of the post-office doesn’t inquiry about the needs of loans to holders. These loans cover emergency medical expenses, education, business purposes, etc.

Eligibility criteria for taking a loan against National Savings Certificate (NSC)

There are two basic criteria needs to be fulfilled before approval of the loan:

• Age: The age of NSC certificate holders should at least 18 years and a maximum of 75 years.
• Ownership of NSC certificate: The either owner or joint member can apply for a loan against NSC. 

Certificate Transfer facility under NSC

• Post-office Branch Transfer: Branch transfer facility is available under NSC. To transfer the branch, the certificate holder needs to submit a signed written request to the respective post office. In the case of a joint account, the signature of both is necessary.
• Name transfer: In the case of name transfer, the certificate holder will have to submit the written application to the respective branch. A permit letter issued by the postmaster will be required.

Some advantages of National Savings Certificate

NSC Online Maturity Calculator