What is National Savings Certificate (NSC)?
The National Savings Certificate (NSC) is a government-backed investment option offered by the Ministry of Finance in India. It is a fixed-income instrument that allows individuals to earn a fixed rate of interest on their savings. The NSC is a tax-saving investment option, as the contributions made to the certificate are eligible for tax deductions under section 80C of the Income Tax Act.
Eligibility for NSC
Any resident Indian individual can invest in the NSC, including minors who can invest through a guardian. Non-resident Indians (NRIs) are not eligible to invest in the NSC.
Types of NSC
There are two types of NSCs available - the NSC VIII Issue and the NSC IX Issue. The NSC VIII Issue has a maturity period of 5 years, while the NSC IX Issue has a maturity period of 10 years.
As per the clarification from the Ministry of Communications issued on December 2, 2022, “Though NSC IX Issue is a discontinued scheme, NSC IX Issue certificates may be discharged / encashed / closed in any Departmental Post Office, following the procedures prescribed in Chapter 13 of POSB CBS Manual Volume (Corrected up to 31.12.202D.”
How to Invest in NSC
Individuals can purchase NSCs from designated post offices in India. To invest in the NSC, the individual must fill out an application form and provide proof of identity and address. The minimum investment amount for the NSC VIII Issue is INR 100 (Indian Rupees), and for the NSC IX Issue, it is INR 1,000. There is no maximum investment limit for the NSC.
Interest Rate on NSC
The interest rate on the NSC is determined by the government and is reviewed periodically. The current interest rate on the NSC VIII Issue is 6.8% per annum, compounded annually, and on the NSC IX Issue, it is 6.6% per annum, compounded annually.
Tax Benefits of NSC
The NSC is a tax-saving investment option, as the contributions made to the certificate are eligible for tax deductions under section 80C of the Income Tax Act. The interest earned on the NSC is taxable, but it is eligible for tax deductions under section 80C.
NSC as a Savings and Investment Option
The NSC is a fixed-income investment option that allows individuals to earn a fixed rate of interest on their savings. It is a safe and secure investment option, backed by the government, with moderate returns. The NSC is a useful tool for individuals looking to save and invest for the long term.
Conclusion
The National Savings Certificate (NSC) is a government-backed investment option offered by the Ministry of Finance in India. It is a tax-saving investment option that allows individuals to earn a fixed rate of interest on their savings. The NSC is a safe and secure investment option with moderate returns, and is a useful tool for long-term savings and investment. It is an investment option worth considering for anyone looking to set aside a portion of their income for the future.