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 investo₹ 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:
|Eligibility||Any resident individual singly or jointly with other adult. Applications for purchase of NSCs may be submitted on NC-71.
Parents and guardians can also purchase NSCs on single holder basis on behalf of a minor.
Non residents cannot invest in NSCs. If a resident Indian having purchased a certificate, subsequently becomes Non-Resident during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he becomes a non-Resident, and interest shall be paid at the rate applicable to the Post Office Savings Account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed.
|Minimum amount||₹ 100/-|
|Maximum amount||No maximum limit|
|Six years for NSCs purchased upto 30th November 2011.|
Five years for NSCs purchased on or after 1st December 2011.
|Interest compounding||The interest compounding periodicity has been changed from half yearly to yearly since 01.04.2016.|
|Post Maturity Interest||Where on maturity the amount has become due but not paid, it shall carry interest from the date of maturity upto the date of payment at prevailing Post Office Saving Bank account interest rate.|
|Nomination facility||Available except for NSCs purchased in the name of minors.
Application for Cancellation or Variation of Nomination previously made be submitted on form NC-53.
|Transferability||Transferable 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.
|Encashment||A Certificate issued upto 30th November 2011 can be encashed after Six years and the certificates issued on or after 1st December 2011 can be encashed 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 at POSB rate is payable.
The amount payable after expiry of three years from the date of the certificate (VIII issue) is as under:
|Tax benefits||Amount invested is eligible for deduction under Section 80C. Interest accrued during the year except for the last year is deemed to be reinvested and shall also qualify for deduction under Section 80C.
No TDS is deducted on repayment.
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.
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