When it comes to investing, for many, the safety of the investment is the primary importance. And among all the save instruments which guarantee fixed returns, the funds and schemes which are guaranteed by the Government of the nation are most popular. One such scheme which is backed by the Government of India is The National Saving Certificate Scheme.
Investing ins National Saving Certificate is most popular for the type of investors who wanted fixed returns with less risk. This has a fixed maturity period and cannot be withdrawn before the maturity date. For investors whose objective is to avail tax deductions on deposits and also get fixed returns, this investment is most suitable. And additionally, the popularity of the scheme can be attributed to the below reasons
The scheme is backed by Government of India and hence safest investment
The scheme gives fixed returns to the investors.
Tax saving is applicable in this scheme.
It is available in Post offices, and hence most popular because of the reach of Post offices across the nation
The interest rate that is provided by the Scheme is guaranteed. As of now, the interest rate is 6.8% and this keeps on changing. Please visit this link(NSC Interest rates) to check the prevailing interest rates. This interest rate is revised on a quarterly basis based on the prevailing government bond rates. But keep in mind that for the investor the interest he will be getting fixed while investing and the same interest rate is applicable thought the tenure of your investment period.
And also if you have invested in NSC, you can avail of loans against the NSC investment. The amount of loan you are eligible for depends on the investment amount. You cannot withdraw the investment before the end of tenure of investment. But when the person who has invested expired then the amount the be withdrawn by the nominee.
As mentioned earlier the investment amount under National savings certificate is eligible for tax deductions under Section 80C of the Income Tax act and up to a maximum of ₹1.5 lakh rupees during each financial year. Since the interest earned on the NSC is automatically reinvested, it can be claimed as a deduction under Section 80C. But if the accrued interest is not added to the ₹ 1.5 lakh deduction under Section 80C, then the entire income is taxable on maturity.
If an investor wanted to invest in the National Savings certificate, the investor can approach the nearby post office to do the same. As said earlier, the reach of post offices across the nation is one reason because of the popularity of the scheme.
In order to invest in the NSC, the investor has to approach the Post Office and follow the below steps
An application has to be filled by the investor that is available at the post office.
Original ID proof has to be submitted by the investor for verification. (Such as Aadhaar, passport etc. recognized by the govt of India)
Pay the investment amount via different available methods such as Demand Draft, Cash, cheque in favor of the Post master of the Post office.
Points to Remember
National savings certificates are en-cashable only at any post office in India, with the condition that one has obtained transfer rights.
You can also pledge your NSC certificates to obtain loans for liquidity purpose.
In case of loss or damage of NSC certificates, duplicate certificates can be obtained on furnishing an indemnity bond.
NSC certificates are transferable across post offices in India.
Interest income is taxable (if not claimed under Section 80C), but no tax is deducted at the source.
Features at a Glance Eligibility: You need to be a resident Indian to buy the NSC Entry age: No age is specified for account opening Minimum Investment: Rs 1,000 Interest: 6.8 per cent compounded annually for the period January-March, 2021. Interest rates are subject to revision every quarter. Tenure: Five years Nomination Facility: Available