NSC - National Saving Certificate

National Saving Certificate (NSC), a part of the Indian Postal Service is a type of savings bond provided by the Indian Government used for small tax savings. It first came into the act in the 1950s after India's Independence to help raise money for the development purpose. National Saving Certificates are issued by the postal department and can be acquired from any Indian Postal Service branch.

Working

When an individual spends a specific amount to buy a National Saving Certificate, the procedure of purchase will be done according to the individual's preference but in government designated denominations. The amount spend on buying an NSC is also considered the individual's investment in NSC.

Once the certificate is bought and rates based on the type of certificate bought, the interest rates will be collected. The maturity period of these certificates is set to 5 years or 10 years starting from the date of purchase. Although, the interest rate is calculated annually and can't be acquired by the certificate holder until the investment reaches some period. One can also reinvest the interest acquired in National Saving Certificate Scheme.

Types of NSCs

NSC Issue VIII

NSC Issue VIII Certificate is provided with the purpose to invest in safe places and save tax at the same time. NSC Issue VIII certificate is available for every Indian citizen except a trust or Hindu Undivided Family (HUF).The denominations available in this certificate ranges from Rs 100 to Rs 10,000 with an interest rate a bit lower than NSC Issue IX along with a maturity period of 5 years.

NSC Issue IX

The denominations available in this certificate also range from Rs 100 to Rs 10,000 with an interest rate a bit higher than NSC Issue VIII along with a maturity period of 10 years.

National Saving Certificate Benefits:

NSC comes with the following benefits only when used properly;

  • Except the interest earned in the last year, it can be totally tax-free.
  • The denominations range between Rs 100 and Rs 1000 for investing in NSCs but can invest according to your status as there is no limit set on the amount.
  • Duplicate certificates can be made available if one tends to lose it or if it gets damaged.
  • One can have the benefits of saving taxes as it comes under Income Tax Act, Section-80C which provides with the benefits as the Investor Tax.
  • An applicant can apply for the certificate on minor's behalf also.
  • It is a possible way to secure loans.
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