National Savings Certificate(NSC) is one of the India Government’s oldest schemes. It is a perfect scheme to make small investments and get guaranteed returns. Moreover, it has a huge tax benefit of up to Rs. 1.5 lakh. The main objective of this scheme was to promote a savings habit among the citizens of India. At the same time, the Government uses the money received through this scheme for the development of this country.
There are broadly two types of people when it comes to the discussion about finances and taxes. The first group is the people who are completely unaware of the subject and therefore find no interest in such topics. Or, maybe loose interest as these discussions are way too technical and complicated to understand.
And the second group would be the people who know the basic aspects. But there are a lot of layers beneath the surface that remains unknown for the majority of people.
Hence, in this article, we will be discussing everything about the National Savings Certificates (NSC).
|Name of the Scheme||National Savings Certificate (NSC)|
|Scheme Launched by||Government of India|
|Targeted Beneficiaries||Every Indian Citizen|
|Objective of the Scheme||Small savings and income tax saving investments in India|
|Mode of Application||Offline|
|Benefits||Inculcate savings habit in people of India|
|Supervised by||Ministry of Finance|
What Exactly is the scheme?
National Savings Certificate is a government savings bond that primarily aims for small investments and tax savings. The sole idea behind the plan was to create a nation-building scheme. This government initiative encourages subscribers who belong mainly from the small and mid-income sectors of the society to invest and get a chance to save on their income tax.
This is a fairly secure and low-risk financial product as it is backed by the Govt. These certificates are available in any of your nearest post offices. You can either buy it in your name as a single holder or with a minor or an adult as a joint holder of the certificate. These certificates have 5 years of fixed maturity period.
Another important advantage of these certificates is the tax relaxation of up to 1.5 lakh under the income tax Section 80C. There is no upper limit for buying these certificates.
Also Read, What is National Pension Scheme
Eligibility Criteria for National Savings Certificate (NSC)
The eligibility criteria for buying National Savings Certificates are very basic as it is almost open to all. However, the key points to keep in mind before investing in NSCs are as follows:
- Every Indian citizen residing in this country is eligible to invest in it.
- NRIs cannot purchase these certificates. But in case any existing subscriber has to move abroad before the maturity of his certificate, such NSCs are only valid till their maturity.
- Karta or the head of any Hindu Undivided Families can purchase NSCs only in his own name.
The National Savings Certificates are for individual Indian citizens. Hence, the cases listed below are the ones who cannot invest in NSCs –
- Hindu Undivided Families (HUFs) as a group
- Any kind of trusts
- Private and public limited companies
- non-residential Indians (NRIs)
Also Read, Sukannya Sammriddhi Yojana
How and where to buy National Savings Certificate (NSCs) from?
From this year, NCSs are going to be available in both electronic and passbook mode. One needs a savings account either in the post office or in a bank with or without the internet banking facility to buy an NSC. Earlier one had to visit the nearest post office and collect a form. Then he had to submit the duly attached form along with several other documents and the investment amount in cash or check or demand draft.
With the introduction of the new e-mode, anyone will be able to buy NSC forms online. If you have a bank or post-office savings account with active net-banking service, then you will be able to buy NSC in e-mode.
Modes of National Savings Certificate (NSCs)
There are 3 different modes under which anyone can hold NSCs –
- Single Holder: This type of certificate is only applicable to single adult individuals. There is a provision of nominee but the owner must make all the operational decisions. You can even purchase the scheme in the name of a minor. But in that case, the investor should be the legal guardian of the minor.
- Joint Holder Type A: In this type of certificate, the owners can be two individual adults. Both will be able to access the account and the maturity amount and both of their signatures will be needed for cancellation or any other major decision making regarding the certificate.
- Joint Holder Type B: The ownership of this type of certificate will also be entertained by two different adults. But either one of them will only get the maturity amount.
The withdrawal policy of these certificates is a unique point of the scheme. The certificates come with a pre-determined lock-in period. So, no premature withdrawal is allowed until the death of the subscriber, or on the order of the court. In such exceptional cases of premature withdrawals, there are certain rules one has to follow.
If one applies for withdrawal within 1 year from the date of issue of the certificate, then no interest amount would be payable to the investor. And if the withdrawal is done after the 1st year, then the investor would get the interest value but with some discount on the invested amount.
The grievance policy is very straight forward in this scheme. There is a grievance form available on the official website visit here. One has to fill up all the necessary details and submit the form online for any grievance.
Benefits of National Savings Certificate (NSC)
There are too many benefits to this scheme. But to list some of the best and unique benefits would be
- Firstly, there is no excess charge of tax on the invested amount.
- Secondly, these certificates earn higher returns as the interest is in the compound system.
- one can easily avail bank loans against these certificates.
- Highest return rate amongst other fixed-rate investment options.
- And finally, one can arrange duplicate certificates on loss or damage to the original.
In conclusion, the National Savings Certificate (NSC) is a Government-backed savings scheme that is suitable for all Indians for its high returns and low risks. Those looking for a safe investment can consider investing in it. But one must always keep inflation in one’s mind before making any kind of investment.