The National Savings Certificate – NSC is a government-backed savings product that offers investors fixed interest rates and returns. The NSC is a popular choice for risk-averse investors looking for stability and guaranteed returns. In this blog post, we will explore the features and benefits of the NSC, as well as some of the key considerations to keep in mind before investing. Read on to learn more about the National Savings Certificate and how it can help you reach your financial goals.
What is National Savings Certificate (NSC)?
A National Savings Certificate (NSC) is a savings certificate issued by the Indian Government. It is available in two types, namely, NSC VIII and NSC IX. The interest on an NSC accrues from the date of purchase and is compounded annually. The maturity period of an NSC is 5 years.
The main features of an NSC are as follows:
- It offers a fixed rate of return, which is currently at 8% per annum.
- The interest on an NSC is tax-exempt.
- An NSC can be purchased from any post office in India.
Who is eligible to buy NSC?
To be eligible to purchase an NSC, you must be a resident of India and have a PAN card. You can purchase NSCs from any post office or authorized bank branch. The minimum investment amount is Rs. 100, and there is no maximum limit.
What are the benefits of NSC?
Investing in National Savings Certificates (NSC) is a safe and guaranteed way to earn fixed interest income. As NSC is a government-backed investment, it offers several benefits, including:
- Capital protection: The principal investment amount is Safe and Secure with the Government of India.
- Fixed return: NSC offers a fixed rate of return, meaning that investors know exactly how much they will earn on their investment over the term of the certificate.
- Tax benefits: Interest earned on NSC is exempt from tax under Section 80C of the Income Tax Act, making it an attractive investment option for those looking to save on taxes.
- Easy to purchase: NSC can be easily purchased from any post office branch in India.
How to buy NSC?
To buy a National Savings Certificate (NSC), you must first open a Post Office Savings Account. Once you have opened an account, you can purchase NSCs from any post office.
When purchasing an NSC, you will need to provide your account number and the amount of money you wish to invest. The minimum investment is Rs. 100 and the maximum investment is Rs. 1,500.
NSCs are available in denominations of Rs. 100, Rs. 500, and Rs. 1,000. You can purchase multiple certificates, but the total investment cannot exceed Rs. 1,500 in a financial year.
Once you have purchased an NSC, it cannot be surrendered or encashed before the maturity period of 5 years. If you need to withdraw your money before the maturity period, you will incur a penalty of 2%.
Where to encash NSC?
If you have a National Savings Certificate (NSC), you can encash it at any post office. To do so, you will need to fill out a form and present your NSC and valid ID. The process is typically quick and easy, and you will receive your money in cash.
Tax benefits of NSC
There are several tax benefits of investing in National Savings Certificates (NSCs). Firstly, the interest earned on NSCs is exempt from income tax. Secondly, the investment made in NSCs is eligible for deduction under Section 80C of the Income Tax Act. This means that you can claim a deduction of up to Rs. 1.5 lakhs on your investment in NSCs in a financial year.
NSC interest rates
As of September 2019, the interest rate for NSC is 6.8%. This means that for every Rs. 100 invested in an NSC, the holder will earn 6.8 Paise per year. The interest is compounded annually, meaning that it is added to the principal (initial investment) at the end of each year, and then earns interest on the new total.
NSCs have a fixed maturity period of 5 or 10 years, and cannot be redeemed before that time. If you cash in your NSC before 5 or 10 years, you will forfeit any accrued interest and will only receive the original principal amount invested.
Also Read: Income Tax Challan 280 Online Payment