National Saving Certificate (NSC) -Part II

 

The Finance System - NSC 

Topics covered :

NSC Investment Process 
NSC Tax Benefits
NSC Redemption after maturity & Pre maturity Process

NSC Interest Rate History

NSC Investment Process 

You used to be able to buy National Savings Certificates by getting a paper copy, but this stopped in 2016. Now, you can get them in electronic form or with a passbook. Investing with a passbook is hard and takes a lot of time. Instead, you can invest using a savings account at a nearby post office or an approved bank. To buy NSC certificates online, your savings account needs to have internet banking.

NSC Investment Online Process

To invest in NSC online go through follow steps:  

1. Open Department of Posts (DOP) net banking and log in. 
2. Under 'General Services', select 'Service Requests'. 
3. Click on 'New Requests' and choose ‘NSC Account – Open an NSC Account (For NSC)’. 
4. Enter the deposit amount and choose the debit account linked to the PO savings account. 
5. Choose ‘Click Here’ to run through the terms and conditions. Accept them once done. 
6. Enter the transaction password and click on ‘Submit’. 
7. The deposit receipt will be there to view and download. 

To invest in NSC offline go through follow steps:  

1. Collect the NSC application form online or at any post office. 
2. Fill out the form with all the details. 
3. Submit the form with self-attested copies of the required KYC documents.  
4. Take the original documents for verification and pay the amount you want to invest.
5. Upon approval, collect the NSC of your application.  

NSC Tax Benefits

You can invest any amount in NSC, but only up to Rs. 1.5 lakhs can help you save on taxes under Section 80C. For the first four years, you don’t have to pay tax on your investment. The interest you earn in those years is added to your total amount, which can also help you with tax benefits, as long as it stays under Rs. 1.5 lakhs. However, the interest you earn in the fifth year will not be added to your total and will be taxed based on your tax rate.

NSC Redemption after maturity & Pre Maturity Process

Redemption after Maturity

When the NSC matures, you can cash it at any Post Office, not just the one where you opened your account. If you want to get your money from a different Post Office, you need to fill out a form with details like the serial number, issue date, your full name, and both your registered and current addresses. 

To cash in your maturity amount, bring these documents:

• The original NSC certificate 
• An ID proof
• The NSC cashing form
• The person getting the money must sign the back of the certificate after receiving it.

Pre Maturity Redemption Process

 A National Savings Certificate (NSC) lasts for 5 years. You cannot take your money out early, but in special cases, like if the investor dies or if a court orders it, you might be allowed to withdraw it early. 
Now that you understand what NSC is and how it can help your savings, you can decide if you want to invest. Since the NSC lasts for only five years, it's good for people who want a safe, short-term investment. If you want a better return than a regular fixed deposit (FD), consider investing in NSC.

NSC Interest Rate History

Take Away

Investing depends on how much risk the investor can handle. It's important to think about the risks and rewards of the investment and to have enough information about it. This article will give you important details about the National Savings Certificate (NSC) scheme and what you need to know.

National Saving Certificate (NSC)

 

The Finance System - NSC

Topics covered :

About National Savings Certificate 
Eligibility Criteria 
Features & Benefits of NSC

The National Savings Certificate (NSC) is a safe way to invest money offered by the Government of India through post offices. It gives good returns and tax benefits under Section 80C of the Income Tax Act, making it a popular choice for people who want to avoid risks.

The NSC was started on May 8, 1989. By putting money into this scheme, you can safely grow your savings with fixed returns and save on taxes. NSC is great for people who want steady returns that are usually better than fixed deposits.(Also Read Bank Fixed Deposit)

If you're thinking about whether investing in NSC certificates is good for your finances, this blog will help you understand the National Savings Certificate scheme better.

About National Savings Certificate 

A National Savings Certificate (NSC) is a secure investment option offered by India Post and is good for people who want to invest small to medium amounts for five years. The interest rates are set by the Government of India and checked every three months.  

NSC is a safe way to invest money that you can open at any post office. It is started by the Government of India to help people, especially those with small to medium incomes, save money and also pay less tax. 
The main aim of investing in NSC is to earn good returns while saving on taxes. By buying an NSC, you can get tax benefits and save up to Rs.1.5 lakh in taxes each year under Section 80C of the Income Tax Act.

NSCs are short-term investments that earn fixed interest. Once you invest in an NSC, it starts earning interest for that year, and you cannot add more money to that certificate. You also cannot take your money out early because the investment is locked for five years.

However, you can buy a new NSC certificate from any nearby post office. Remember, the interest rate is fixed when you buy it, and it grows each year but is paid out only at the end of the investment period.

Eligibility Criteria 

If you want a safe investment and don't want to take risks, you can invest in NSC. It is a short-term option that gives guaranteed returns and protects your money.

Anyone who wants a safe way to earn interest and save on taxes can invest in NSC. It offers guaranteed interest and protects your capital. However, it may not provide high returns like some mutual funds or the National Pension System.

To invest in the National Savings Certificate, you need to meet these requirements:

• You must be a resident Indian citizen. Non-Resident Indians (NRIs) cannot invest in NSC.
• There is no age limit to invest. You can also invest for a child.
• Companies, trusts, and Hindu Undivided Families cannot invest in this scheme.

Features & Benefits of NSC

a) Easy to Access : You can easily invest in a National Savings Certificate by handing in your documents at any post office or authorized bank. The application is simple and can also be done online by submitting a few identity documents. 

You can easily move your NSC account from one post office to another. You can also change who owns the certificate without much trouble if needed.

b) Fixed Income: Right now, this scheme gives a guaranteed return of 7.7% for investors. The returns from NSC are usually better than Fixed Deposits (FDs). Also Read - Bank Fixed Deposit F. 

The National Savings Certificate offers fixed returns for the whole term. The interest does not change with market conditions. The returns from NSC are usually higher than FDs for the same period.

After the investment period ends, you will get the full amount. There is no tax deducted at source (TDS) on National Savings Certificate (NSC) payments, so you must pay any taxes owed.

c) Interest Rate: The current interest rate is 7.7% per year, which the government changes every three months. Interest is added to your investment each year but paid out when the investment matures after 5 years. The interest you earn is automatically reinvested, but it may not keep up with inflation.

d) Maturity Period: The investment lasts for 5 years. which is better than PPF. Also read - Public Provident Fund

e) Tax Savings: The NSC is backed by the government, allowing you to claim a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. There are no TDS charges on NSC returns, but you must pay the necessary taxes on your earnings.

f) Types: There used to be two types of NSC, the NSC VIII Issue and NSC IX Issue, but the NSC IX Issue was stopped in December 2015.

g) Investment Range : You can start with a minimum of Rs.1,000/- and add more in multiples of Rs.100/-. There is no maximum amount you can invest or limit on how many times you can deposit.

h) Loan Collateral: Banks and NBFCs often accept NSC certificates as security for loans. They will add a stamp to the certificate and transfer it to the bank or NBFC providing the loan.

i) Nomination Facility: You can name a family member to receive the money after your investment matures, which helps your family in case of your death.

j) Premature Withdrawal: You cannot withdraw money from an NSC investment before the maturity period ends. You can only get your funds early in special cases, like the investor's death or a court order.