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NSCs (National Savings Certificate) ( VIII and IX Issue )

National Savings Certificates (NSCs) are popular as Tax Saving instruments. NSC scheme has been designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. NSCs are a long term tax saving option for investors. Loan is available form banks against pledge of NSCs in their favour. The amount invested in qualifies for tax benefits under Section 80 C of Income Tax Act. The accrued interest also qualifies for benefits of Section 80C. However, the interest accrued on NSCs is taxable.

Changes in the scheme:

Salient features of NSCs (National Savings Certificates)

FeatureDescription
EligibilityAny individual singly or jointly with other adult. applications for purchase of NSCs may be submitted on NC-71.

A guardian on behalf of a minor.

Minimum amountRs. 100/-
Maximum amountNo maximum limit
Maturity period
(VIII issue)
  • Six years for NSCs purchased upto 30th November 2011.
  • Five years for NSCs purchased on or after 1st December 2011.
Maturity period
(IX issue)
Ten years
Interest Rate
PeriodVIII IssueIX Issue
Upto 30.11.20118.00%NA
01.12.2011 to 31.03.10128.40%8.70%
01.04.2012 to 31.03.20138.608.90%
01.04.2013 onwards8.508.80%
Nomination facilityAvailable

Application for Cancellation or Variation of Nomination previously made be submitted on form NC-53.

TransferabilityTransferable from one Post Office to another. Application for transfer of NSCs from one post office to another be submitted on NC-32.

The certificate can also be transferred from one person to another with the previous consent of the Postmaster or the Head Postmaster by submitting application NC-34.. The transfer can be made after expiry of a period of at least one year from the date of the certificate.

On an application being made in the prescribed Form by the transferor and transferee, the Postmaster may permit the transfer of any certificate (pledging of certificate) as a security.

The transfer is permitted only for the whole amount and not for the part of it.

Transfer of the Certificate purchased on behalf of minor is permitted only if his guardian certifies that the minor is alive and the transfer is for the benefit of the minor.

EncashmentA Certificate issued upto 30th November 2011 can be encashed after Six years and the certificates issued on or after 1st December 2011 can be encased after expiry of Five years.

The Certificate can be encashed at the Post Office at which it stands registered or it at any other Post Office subject to satisfactory verification of the identity of the presenter.

In case of certificates purchased on behalf of a minor who has since attained majority, the certificate shall be signed by such a person himself, but his signature shall be attested either by the person who purchased the certificate on his behalf or by any person who is known to the Postmaster.

In case of death of the holder, in respect of which a nomination is in force, the nominee or nominees are entitled to encash the Certificate at any time before or after the maturity.

Premature EncashmentA Certificate may be prematurely encashed in case of
  • Death of the holder
  • Forfeiture by a pledgee being Gazetted Government Officer when the pledge is in conformity with these rules When ordered by the Court of Law
If the Certificate is encashed within one year from the date of certificate, only the face value of the Certificate shall be payable.

If the certificate is encashed after expiry of one year but before the expiry of three years from the date of certificate, an amount equivalent to the face value together with simple interest is payable.

The amount payable after expiry of three years from the date of the certificate (VIII issue) is as under:

Period lapsed from the date of certificateMaturity Amount
Purchased before 30.11.2011Purchased during 01.12.2011 to 31.03.2012Purchased after 01.04.2012
> 3 years < 3 years and 6 months121.15123.14Not Available
> 3 years and 6 months < 4 years125.09127.49Not Available
> 4 years < 4 years and 6 months129.16131.99Not Available
> 4 years and 6 months < 5 years133.36136.65Not Available
> 5 years < 5 years and 6 months137.69Not ApplicableNot Applicable
> 5 years and 6 months < 6 years142.16Not ApplicableNot Applicable
Tax benefitsAvailable under Section 80C
Interest TaxabilityTaxable. Interest accruing annually is automatically reinvested, and such re-invested interest qualify for tax rebate under section 80C of the Income Tax Act.

No tax deduction at source.

Other featuresDeposits are exempt from Wealth tax.

Loans can be availed from banks on pledge of NSCs. Application on NC-41 is required to be submitted for pleadge of NSCs as security.

NSCs are available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000

NSCs can be purchased in Demat Form from select Post Offices.

If a certificate is lost, stolen, destroyed, mutilated or defaced, application may be made showing particulars of the certificate with circumstances attending such loss, theft, destruction, mutilation or defacement for issue of duplicate certificate to the Post Office where the Certificate is registered. If the Officer-In-Charge is satisfied, he shall issue a duplicate Certificate on the applicant furnishing an indemnity bond in the prescribed form with sureties or with a bank's guarantee.

Relevant Forms :

  • NC-29 Form for Issue of Duplicate NSCs/KVPs in Lieu of the Loss / Theft / Destruction / Mutilation of NSCs/KVPs in custody of the holder >
  • NC-54(a) Bond of Indemnity - Issue of a duplicate certificate(s) in lieu of lost, misplaced, spoiled or mutilated certificates. >
  • NC-54(b) Bond of Indemnity - Issue of a duplicate certificate(s) in lieu of lost, misplaced, spoiled or mutilated certificates with a Bank guarantee. >
  • NC-61 Bond of Indemnity - To be executed at the time of discharge of original certificates or Issue of duplicate certificate(s) in lieu of lost, misplaced, spoilt, destroyed, defaced or mutilated certificate (s), where original application for purchase is missing.
  • Annexure 1 Claim form for settlement of Savings Certificates of the deceased, where nomination has been registered.
  • Annexure 2 Claim form for settlement of Savings Certificates of the deceased, where the claim is preferred on legal evidence of heirship.
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