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:

  1. An individual can avail a Single Holder Type Certificate for themselves or a minor.
  2. Two individuals jointly can avail a Joint A Type Certificate. When the NSC matures, both individuals receive equal/joint pay.
  3. 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 An NSC can be withdrawn only after it matures, which is 5 or 10 years. The only exception when an NSC can be withdrawn prematurely by a nominee is if the NSC holder dies.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?

  1. For the 5-year NSC, an INR 100 deposit will give you a maturity value of INR 147. Thus, INR 47 is your profit.
  2. For the 5-year NSC, an INR 10000 deposit will give you a maturity value of INR 14700. Thus, INR 4700 is your profit.

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