What is National Saving Scheme (NSS)?

With the ever-increasing expenses, individuals now seek various investment avenues to grow their savings and secure their future. One such popular financial planning tool for many is the National Savings Scheme (NSS). It is government-backed initiatives offer a safe and reliable way to save and invest, providing a multitude of benefits to investors. So, in the section below let’s explore all about National Savings Scheme or NSS.

Understanding the National Saving Scheme (NSS)

The National Savings Scheme, often referred to as the NSS, is an investment tool offered by the government to encourage savings among its citizens. It is a secure and accessible way for individuals to put aside a portion of their income towards wealth creation. The NSS offers various savings and investment products, with the National Saving Certificate (NSC) being one of the most popular choices among investors. This certificate provides individuals with a safe and guaranteed return on their investment over a specified period, making it an attractive option for risk-averse investors.

Key Features of the NSC

Some of the key features of the National Savings Certificate:

• Fixed Tenure

NSCs come with a fixed tenure, typically ranging from 5 to 10 years. During this period, your investment remains locked, ensuring that you won't be tempted to withdraw your savings prematurely. 

• Government Backing

One of the most significant advantages of NSCs is that they are government-backed, making them a safe and secure investment option. This means that your investment is risk-free, as it is guaranteed by the government and will offer guaranteed returns. 

• Competitive Interest Rates

NSCs offer competitive interest rates that are typically higher than what traditional savings accounts provide. The interest rate varies based on the tenure of the certificate and is fixed at the time of purchase.

• Tax Benefits

There are different types of NSC schemes that are eligible for tax deductions under Section 80C of the Income Tax Act. This makes NSC an attractive option for individuals looking to reduce their tax liability while saving at the same time.

Types of National Savings Scheme

Listed below are the different types of National Savings Scheme:

• Sukanya Samriddhi Yojana

The Sukanya Samriddhi Yojana scheme or SSY is a government-backed savings scheme that is specially designed for a girl child. It can be opened in any bank or nearby post office by the guardian of the girl child. Only one account can be opened for one girl child, and the interest generated out of the account is compounded annually. A girl child can look after the account only after attaining the age of 18 years.

• Senior Citizen Savings Scheme

As the name suggests, the Senior Citizen Savings Scheme is designed for individuals who are above the age of 60 years. This account can be opened jointly or on a single basis as well. It comes with a fixed tenure of 5 years and the interest earned out of it is paid quarterly. The interest earned out of the Senior Citizen Savings Scheme is also eligible for tax deductions.

• Public Provident Fund

The Public Provident Fund or PPF scheme is another popular government-aided scheme that is helpful for investment with a very small amount of money. You can invest in a PPF scheme with an amount that is as low as Rs. 500. PPF comes with a lock-in period of  15 years, which can be further extended for another 5 years. 

Investing in National Saving Certificates

Investing in National Saving Certificates is a straightforward process. Here are the steps to get started:

• Choose the Tenure: Determine the tenure that suits your financial goals. NSCs typically come in 5-year and 10-year options, so select the one that aligns with your investment horizon.
• Fill the Application: Fill out the NSC application form with the necessary details, including your personal information, the amount you want to invest, and the tenure you prefer.
• Submit Required Documents: Along with the application form, you will need to provide Know Your Customer (KYC) documents as per the regulations in your country. This may include proof of identity, address, and photographs.
• Payment: Pay the amount you wish to invest in the NSC. You can make this payment in cash or through a check or demand draft.
• Issuance of Certificate: Once your application is processed, you will receive the National Saving Certificate. Keep this certificate safe, as it serves as evidence of your investment.

Benefits of Investing in NSCs

Investing in National Saving Certificates offers several advantages:

• NSCs are backed by the government, ensuring the safety of your principal amount.
• The fixed interest rate provides predictable and steady returns throughout the certificate's tenure.
• The interest earned on NSCs is eligible for tax deductions, reducing your overall tax liability.
• NSCs are not affected by market fluctuations, making them an excellent choice for risk-averse investors.

Conclusion

The National Saving Scheme (NSS) is a valuable tool for individuals looking to save and invest while prioritizing safety and security. NSSs, with their competitive interest rates, government backing, and tax benefits, make them a compelling choice for risk-averse investors.

By understanding the key features, benefits, and the process of investing in NSSs, you can make informed decisions about how they fit into your financial portfolio. Whether you're saving for a specific goal or seeking a secure investment option, NSSs can be a valuable addition to your financial strategy, providing you with a path toward financial security and peace of mind.

FAQs

• What is the National Savings Scheme?

The National Savings Scheme is a government-aided scheme that helps individuals in multiplying their savings.

• What are some of the popular types of National Savings Scheme?

Some of the popular types of National Savings Scheme include Sukanya Samriddhi Yojana, Public Provident Fund, and a few more.

• Can I get tax benefits with the National Savings Scheme?

Yes, there are a number of National Savings Schemes that qualify for tax exemptions under section 80C of the Income Tax Act of 1961.