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:
- The maturity period of NSCs (VIII Issue) reduced from 6 years to 5 years.
- The interest rate of NSCs (VIII Issue) increased from 8.00% to 8.40% per annum w.e.f. 01.12.2011.
- Introduced NSC (IX issue) with maturity period of 10 years and higher interest rate of 8.70% per annum w.e.f. 01.12.2011.
- The interest rate of NSCs (VIII Issue) increased from 8.40% to 8.60% per annum w.e.f. 01.04.2012.
- The interest rate of NSCs (VIII Issue) revised to 8.50% per annum w.e.f. 01.04.2013.
- The interest rate of NSCs (IX Issue) increased from 8.70% to 8.90% per annum w.e.f. 01.04.2012.
- The interest rate of NSCs (IX Issue) revised to 8.80% per annum w.e.f. 01.04.2013.
Salient features of NSCs (National Savings Certificates)
| Item | Description | |||||||||||||||||||||||||||||||
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| Eligibility | Any individual singly or jointly with other adult.
A guardian on behalf of a minor. | |||||||||||||||||||||||||||||||
| Minimum amount | Rs. 100/- | |||||||||||||||||||||||||||||||
| Maximum amount | No maximum limit | |||||||||||||||||||||||||||||||
| Maturity period (VIII issue) |
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| Maturity period (IX issue) | Ten years | |||||||||||||||||||||||||||||||
| Interest Rate (VIII issue) |
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| Interest Rate (IX issue) |
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| Nomination facility | Available | |||||||||||||||||||||||||||||||
| Transferability | Transferable from one Post Office to another.
The certificate can also be transferred from one person to another with the previous consent of the Postmaster or the Head Postmaster. 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. | |||||||||||||||||||||||||||||||
| Encashment | A Certificate issued upto 30th Novemeber 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 Encashment | A Certificate may be prematurely encashed in case of
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 (VII issue) is as under:
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| Tax benefits | Available under Section 80C | |||||||||||||||||||||||||||||||
| Interest Taxability | Taxable.
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 features | Deposits are exempt from Wealth tax.
Loans can be availed from banks on pledge of NSCs. 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. | |||||||||||||||||||||||||||||||
| Agency Commission | 0.5% | |||||||||||||||||||||||||||||||