What Is a National Savings Certificate, and How Do I Get One?

The NSC scheme is available at all Post Offices and promoted by the Indian Government. Since the scheme is backed by the Indian Government, the risk is considered to be very low.

The scheme is applicable only to Indian citizens and not applicable for Non-Resident Indian (NRI) and a HUF. Due to the income tax benefits, low minimum investments requirement and low risk, the national pension scheme is gaining popularity.

NSC Interest Rate 2022

The Ministry of Finance announces NSC interest rates every quarter. The current interest rate for the NSC scheme is 6.80% (Oct-Dec 2021). The Finance Ministry has kept the NSC interest rate unchanged from the last quarter.

NSC Eligibility

The eligibility criteria for an investor is listed below:

• The individual must be an Indian citizen
• An individual must not be a non-resident Indian citizen
• No age limit for an individual to invest in NSC
• An investor can purchase NSC from an Indian Post Office for a maturity period of 5 years
• The minimum investments must be Rs 100 and no maximum limit on the investment amount.
• It is issued in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs. 10,000.   
• It is accepted by the majority of banks as collateral security against loans
• An investment can be made with another adult or on behalf of a minor
• HUFs and Trusts are not eligible to invest in the scheme under NSC VIII issue
• They are available for a maturity period of 5 years and 10 years

Documents Required for NSC Scheme

Below are the documents required to submit:

• NSC application form duly filled and signed
• A recent photograph
• An original identity proof such as Passport, Permanent Account Number (PAN), Voter ID, Driving license
• An original address proof such as Passport, utility bills, Bank statement, etc.

Benefits of National Saving Certificate (NSC) scheme

Below are the benefits of investing in an NSC scheme:

• It carries a tax benefit of the principal amount invested as well as the interest earned. Both are tax-free. the principal amount carries a tax deduction u/s 80C of The Income Tax Act 1961.
• Except the interest earned in the final year of the investment, the entire interest earned is tax-free.
• The transfer is allowed from one individual to another, only once during the lock-in period.
• An investor is allowed to invest even after the maturity period.
• A duplicate certificate can be obtained in case the original certificate is lost.
• The interest earned is compounded annually and reinvested towards the scheme. 

Who should invest in the NSC scheme?

An investor looking for the below can consider investing:

• a fixed income at regular interval like monthly, quarterly basis or yearly
• a guaranteed interest rate
• low risk
• save tax

The scheme has the above benefits along with a few disadvantages like lower interest rates and no inflation adjustment. Unlike tax saving mutual funds and the National Pension System, it does not provide inflation bearing returns.

Conclusion

Now that we know all about the scheme, if you are looking for a fixed income, save tax with low risk, this is surely suitable. But there are other investment options as well that are tax saving options being inflation-adjusted as well. You can compare all the investment options and invest wisely.

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