National Savings Certificate (NSC)

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What is National Savings Certificate?

National Savings Certificate is a government-backed savings-and-investment product that may be obtained from a post office. It is a good choice if you wish to diversify your investments by placing money into a low-risk product with guaranteed returns. The plan is currently offering a 6.8 per cent interest rate. To determine how much profit you can expect from the scheme, use the NSC calculator online.

Eligibility Criteria for NSC

  • The person must be an Indian citizen.
  • HUFs (Hindu Undivided Families) are not eligible.
  • Trusts are also barred from making NSC investments under the NSC VIII problem.
  • Non-resident Indians are not permitted to buy new NSCs. If an Indian person who is already a subscriber to NSCs becomes an NRI before the certificates mature, the NSC accounts can be kept until the certificates mature.
  • Private limited firms and public limited companies are ineligible.
  • Kartas of HUFs can only invest in the NSC plan in their own name.
  • On behalf of a minor, an investment might be made with a parent or guardian.
  • There are no restrictions on an individual’s ability to invest in NSC based on their age.

Documents needed to open a NSC Account

  • Application form for the NSC
  • A recent passport photograph
  • An original identity proof, such as a PAN, Passport, Driving License, Voter ID, or Aadhar Card.
  • Address proof, such as utility bills, a passport, a bank statement, a phone bill, and so on.

How to invest in NSCs?

It is incredibly simple to open an NSC account. You simply need to go to any Indian Post Office and obtain an NSC application form. Currently, there is no way to subscribe to NSC online.

  • Fill out the NSC application form and submit it along with the necessary documentation, such as KYC.
  • Provide the Post Office with self-attested copies of your KYC documents. (You may need to bring the original documents with you for additional verification.)
  • Make a cash, check, or demand draught payment to your NSC account.
  • When the procedure is completed successfully, you will receive an acknowledgment.

Benefits of Investing in NSC

  • NSC investments are tax-free, and individuals can benefit from tax breaks on the returns they receive.
  • The returns are guaranteed because the Central Government maintains it.
  • When compared to other fixed-income securities, NSC has one of the highest rates of return.
  • National Savings Certificates can easily obtained by visiting any Indian Post Office.
  • If you misplace your original NSC certificate, you can request for a copy to keep your investment going.
  • It offers a tax deduction benefit on investments up to Rs. 1.5 lakh each year.
  • Under certain situations, the certificate can be simply transferred from one person to another.
  • Even if the maturity time has passed, you can still invest in the scheme.

Interest Rates of NSC for 2022

Every quarter, the Ministry of Finance announces NSC interest rates. The current NSC scheme interest rate is 6.80 percent (Oct-Dec 2021). The Finance Ministry has maintained the NSC interest rate at the same level as the previous quarter. The NSC scheme’s historical interest rates are listed here.

Prior to 2016, the NSC interest rate announcements were made once a year or as needed. However, interest rates have been released every quarter since April 2016.

The interest is compounded annually but paid at the certificate’s maturity. The returns are automatically re-invested due to the compounding of interest. The interest gained on the principal amount is re-invested in NSC. As a result, it is allowable as a deduction under section 80C of the Income Tax Act 1961 up to INR 1,50,000. Because the scheme is supported by the Government of India, the interest rates are identical throughout all post offices.

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