National Savings Certificate (NSC)
The National Savings Certificate Scheme or NSC is a small saving scheme run by the Postal Department in Indian. NSC is a relatively safe investment considering its run by the Government. An investor or certificate holder makes an investment for a fixed period on certificates of varied denominations.
Schemes Under NSC
There are three types of NSC available for 5 years. The Pot Office no longer issues the 10- year NSC. The types of NSC available are:
- An individual can avail a Single Holder Type Certificate for themselves or a minor.
- Two individuals jointly can avail a Joint A Type Certificate. When the NSC matures, both individuals receive equal/joint pay.
- Two individuals jointly can avail a Joint B Type Certificate as well. When the NSC matures, either one of the individuals receives the amount in entirety.
Rates and Features of NSC
- A 5 year NSC is available at an interest rate of 7.8% per year.
- The NSCs have no maximum investment limit and are available in denominations INR 100, 500, 1000, and 10000. The minimum investment is INR 100.
- No TDS for NSCs.
- Investments up to INR 1,50,000 qualify for tax rebate under Section 80C of the Income Tax Act, 1961. Interests also qualify for a deduction.
- An applicant can use an NSC certificate as collateral to avail a loan from a bank.
- Trusts and HUFs cannot invest in NSC.
- Also, the deposit amount can be reinvested on maturity.
- You can transfer an NSC only once.
Withdrawal of NSC
An investor cannot prematurely withdraw an NSC. An NSC can be withdrawn only after it matures, which is 5 or 10 years. The only exception when an NSC can be withdrawn prematurely by a nominee is if the NSC holder dies.
How To Calculate NSC?
To calculate your NSC:
- For the 5-year NSC, an INR 100 deposit will give you a maturity value of INR 147. Thus, INR 47 is your profit.
- For the 5-year NSC, an INR 10000 deposit will give you a maturity value of INR 14700. Thus, INR 4700 is your profit.