National savings certificate (NSC) 2024: Secure your investment with guaranteed returns

National Savings Certificate (NSC) - 2024

The National Savings Certificate (NSC) is a fixed-income investment scheme backed by the Indian government. It is designed to promote savings among low- to mid-income individuals and provides tax benefits under Section 80C of the Income Tax Act. Available at post offices, NSC is a low-risk investment option with guaranteed returns and a fixed tenure of five years.

Key Details of NSC

• Tenure: 5 years
• Rate of Interest: 7.7% p.a., compounded annually, payable at maturity
• Minimum Investment: Rs. 1,000
• Tax Benefits: Available under Section 80C of the Income Tax Act
• Eligibility: Only Indian citizens; NRIs and HUFs are not eligible

NSC Eligibility

To invest in NSC, you must:

• Be an Indian citizen.
• There is no age limit for investors.
• NRIs and HUFs are not eligible to invest.
• Investments can be made jointly or on behalf of a minor.

Latest Updates

• The interest rate for NSC was adjusted from 6.8% to 7.7% for 2023.
• The interest is compounded annually and paid upon maturity.

Features of NSC

• Minimum Investment: Rs. 100, with higher denominations like Rs. 500, Rs. 1,000, Rs. 5,000, and Rs. 10,000.
• Maturity Period: 5 years or 10 years, depending on the issue.
• Interest Rate: 7.7% per annum.
• Nomination Facility: Investors can add family members as nominees, including minors. In the case of death, the nominee receives the certificate.
• Types of NSC: Only NSC VIII Issue is available; NSC IX was discontinued.
• Loans Against NSC: The certificate can be used as collateral for loans.
• Transferability: NSC can be transferred between post offices or to another person, with the certificate's ownership details updated.

Advantages of NSC

1. Tax Benefits: Investments up to Rs. 1.5 lakh qualify for deductions under Section 80C.
2. Guaranteed Interest: Provides a fixed return of 7.7%, compounded annually.
3. Tax-Free Interest: The interest is not taxable each year except in the final year.
4. Duplicate Certificate: A duplicate can be issued if the original certificate is lost.
5. Transferability: Transferable between individuals and post offices, but only once during the lock-in period.
6. Loan Collateral: NSC can be used as collateral for secured loans.

Documents Required to Apply for NSC

• NSC Application Form
• Identification Proof: Passport, PAN Card, Voter ID, Driving License, etc.
• Photograph
• Address Proof: Utility bills, bank statement, or Post Office ID card.

How to Invest in NSC

Offline Investment

1. Collect and fill out the NSC application form.
2. Submit the form along with KYC documents (self-attested copies).
3. Present original documents for verification.
4. Make the payment via cash or cheque.
5. Collect the NSC certificate upon approval.

Online Investment

1. Log in to the Department of Posts internet banking.
2. Navigate to 'Service Requests' under 'General Services'.
3. Select ‘NSC Account – Open an NSC Account’.
4. Enter the deposit amount and choose your linked PO savings account.
5. Accept the terms and conditions and submit.
6. Download the deposit receipt and check account details under 'Accounts'.

Tax Benefits of NSC

• Section 80C Deduction: Investments up to Rs. 1.5 lakh are eligible for deduction.
• Interest Calculation: The interest earned each year is reinvested and considered a fresh investment for tax benefits.
• No TDS: Tax Deducted at Source (TDS) is not applicable. Tax on the interest is based on the investor's income tax slab.

Maturity and Premature Withdrawal

• Maturity: The funds can be withdrawn only after the five-year maturity period.
• Premature Withdrawal: Allowed only in the event of death, forfeiture by a court order, or special circumstances with proper documentation.

Who Should Invest in NSC?

• NSC is suitable for conservative investors looking for capital protection with guaranteed returns.
• It offers tax-saving benefits but may not outperform inflation over time like some other investment options.

FAQs on NSC

1. What is the minimum investment for NSC?

   • The minimum investment is Rs. 1,000.

2. What are the main features of NSC Issue IX?

   • NSC Issue IX had a 10-year tenure and an interest rate of 7.7%, but it was discontinued in December 2015.

3. Can trusts or HUFs invest in NSC?

   • No, trusts and HUFs cannot invest in NSC under current rules.

4. Can I take a loan against NSC?

   • Yes, NSC can be used as collateral for loans.

5. Is there a denomination smaller than Rs. 100?

   • No, the minimum denomination is Rs. 100.

6. What is the tax benefit limit under Section 80C?

   • The tax benefit limit under Section 80C is Rs. 1.5 lakh.

7. What is the maturity period and interest rate for NSC Issue VIII?

   • The maturity period is 5 years, and the interest rate is 7.7% per annum.

8. Is there a lock-in period for NSC investments?

   • Yes, the lock-in period is equal to the maturity period.

9. Can a nomination be changed?

   • Yes, using Form 3, nominations can be changed with a nominal fee.

10. How do I purchase NSC online?

    • NSC can be purchased through the Department of Posts internet banking service.

11. Will tax be deducted at source on NSC interest?

    • No, TDS is not applicable. Investors must declare the interest in their income tax returns.

12. Under which section of the IT Act does NSC fall?

    • NSC investments fall under Section 80C of the Income Tax Act of 1961.

13. Who can hold a single-holder NSC?

    • An adult can purchase a single-holder NSC or on behalf of a minor.

14. Can NRIs invest in NSC?

    • No, NRIs cannot invest in NSC.

15. Can I hold an NSC under joint holding?

    • Yes, joint holding is allowed, except for trusts and HUFs.

Conclusion

The National Savings Certificate (NSC) is an excellent option for risk-averse investors seeking capital protection and tax benefits. With a fixed interest rate of 7.7% and a tenure of five years, it is ideal for individuals looking for stable returns along with tax savings under Section 80C of the Income Tax Act.