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National savings certificates

National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines adequate returns with high safety. NSCs are an instrument for facilitating long-term savings. A large chunk of middle class families use NSCs for saving on their tax, getting double benefits. They not only save tax on their hard-earned income but also make an investment which are sure to give good and safe returns.

How to Invest
National Savings Certificates are available at all post-offices. The application can be made either in person or through an agent. Post office agents are active in nooks and corners of the country. Following types of NSC are issued:
  • Single Holder Type Certificate: This can be issued to: (a) An adult for himself or on behalf of a minor (b) A Trust.
  • Joint 'A' Type Certificate: Issued jointly to two adults payable to both holders jointly or to the survivor.
  • Joint 'B' Type Certificate: Issued jointly to two adults payable to either of the holders or to the survivor.
Who can Invest
  • An adult in his own name or on behalf of a minor
  • A trust
  • Two adults jointly
Denomiations and Limit
National Savings Certificates are available in the denominations of Rs. 100 Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for you to decide how much you want to put in the NSCs. This is of course a huge benefit for you can decide as much as your budget allows.

Period of maturity of a certificate is six years. Presently interest paid is 8 % per annum half yearly compounded. Maturity value of a certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.

Tax Benefits
  • Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested.
  • Income Tax rebate is available on the amount invested and interest accruing under Section 88 of Income Tax Act, as amended from time to time.
  • Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.

PS: information provided here may not be accurate. Please check with your local post-office or other source for accuracy.