Few facts on the National Savings Certificates

Planning

oi-Sneha

By Sneha B K

Updated: Thursday, January 17, 2013, 13:01 [IST]

National Savings Certificate (NSC) is an instrument offered by Government of India with a purpose to encourage savings. It offers tax benefit under 80C, comes with a lock-in and can be pledged to take a loan.

The Scheme is specially designed for Government employees, businessmen and other salaried classes who are Income Tax assesses.

NSC VIII Issue

• No maximum limit for investment.
• No tax deduction at source.
• Certificates can be kept as collateral security to get loan from banks.
• Investment up to INR 1,00,000/- per annum qualifies for IT rebate under section 80C of Income Tax Act.
• Trust and HUF cannot invest.
• Duration is for 5 years
• Rate of interest 8.60%.
• Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 152.35 after 5 years.

NSC IX Issue

• No maximum limit for investment.
• Duration is for 10 years.
• INR. 100/- grows to INR 234.35 after 10 years.
• Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
• A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.
• Rate of interest 8.90%.
• Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 238.87 after 10 years.

Government will announce interest rates before April 1 of every financial year. As these instrument is offered by government, they are considered to be highly secured.

NSCs are transferable from one post office to another. Also, there is a facility of duplicate certificate in case of lost, stolen, destroyed, mutilated or defaced certificate.

Taxation:

To avail tax benefit it is important to declare the accrued interest on NSC on a yearly basis in your tax return. Interest earned on the NSC is taxable but no TDS. Investments in certificate is compounded semi-annually.

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