When it comes to the matter of savings, there are a lot of options that have been made available to investors in India. These options offer a range of features that can include things like attractive interest rate, safety for the money invested, income tax benefits and also the chance to increase the amount invested and that too by a substantial amount.
How NSC Works
When it comes to investing in NSC here is what you need to know about how the whole scheme works. How the whole thing works is, you buy an NSC worth a specific amount which is considered your investment. The purchase of the certificates will be done to the tune chosen by you but in denominations designated by the government. This means that if you choose to invest
Types of NSC certificates
There are two types of NSC certificates that are available at the post office. While the two types, referred to as Issues, share the same general properties, there are some subtle differences between the two.
- NSC Issue VIII
With NSC Issue VIII, the aim was to provide an investment avenue for those people who were looking for a way to invest in safe instruments and avail tax benefits at the same time. The certificates issued under this version are available to everyone except a HUF and a trust. These certificates come in denominations ranging from Rs. 100 to Rs. 10,000 but have an interest rate that is slightly lower than the once offered for Issue IX. Another key feature of these certificates is that they come with a maturity period of 5 years.
- NSC Issue IX
The Issue IX certificates also come in denominations ranging from Rs. 100 to Rs. 10,000 and comes with an interest that is slightly higher than that which is offered for Issue VIII. These certificates come with a maturity period that can be as long as 10 years. As is the case with Issue VIII, these certificates also come with no limit on the amount that can be invested in them but there is a limit on the minimum investment, which is Rs. 100.
Types of holding for NSC
Apart from the two versions that are available under NSC, there are also different modes under which these certificates can be held. These are:
- Single Holder Type certificate
As the name suggests, such a certificate is issued to an individual and can be held only by one person. He or she can, of course, appoint nominees for the certificates but they will be the only ones making decisions about them. This certificate can be provided for an adult or to an adult on behalf of a minor.
- Joint ‘A’ Type Certificate
The Join ‘A’ Type certificate is one which is issued to two adult holders and is payable to both when the certificates mature. It can be operated by either of the holders and both the holders signature will be needed in case it is to be transferred or cancelled, or even if the nomination needs to be changed.
- Joint ‘B’ Type Certificate
This certificate is the same as the A type joint certificate in that, it too can be issued to two adults who can hold and operate the certificates. The only way that it differs from the previous certificates is in the payment of the maturity value. Unlike the A type joint certificate, this one pays the maturity value to any one of the two holders.
Who can’t buy NSCs?
While NSC is an investment that almost every tax paying Indian can put money in, there are some who are not allowed to invest in these schemes.
- Since the scheme is aimed at residents of the country, those not residing in India are not eligible to invest in NSC.
- Under Issue VIII of NSC Trusts and Hindu Unified Families are also not eligible to invest in NSCs.
Features of National Savings Certificates
While there are a lot of features that the NSC shares with other savings schemes, there are some that are typical to the NSC. Some of the features can also differ
- These certificates can be taken by an individual and held as individual investments or taken and held as a joint investment.
- While there is a limit on who can invest in an NSC, there is no limit on the amount that a person can invest in an NSC.
- Since these products are meant for individuals, groups of people like companies, trusts, or Hindu Unified Families, cannot invest in them.
- There is a possibility where an individual can take NSC on behalf of a minor.
- The minimum amount that a person can invest in an NSC is Rs. 100.
- There are also specific denominations in which these certificates can be taken and these are Rs. 100, Rs. 1,000, Rs. 5,000 and Rs. 10,000 under NSC Issue IX.
- Investments cannot be withdrawn prematurely unless the case involves the death of the primary holders.
- Nomination facilities are also provided under both Issue VIII and Issue IX.
- The certificates can only be encashed at the post office where they were issued, however, if the holder can provide sufficient evidence that he is entitled to the proceeds then they can be encashed as any post office.
Benefits of investing in NSC
If handled right, investments in NSC can afford a person the following benefits:
- The interest can be virtually tax-free except for the interest that is earned in the last year.
- There is no upper limit on the amount that can be invested in these certificates.
- If the certificates are lost or damaged, duplicates can be arranged for.
- Investments made in an NSC come under 80C of the IT ACT and afford the investor tax benefits.
- The interest earned is compounded and reinvested in the scheme by default which means that without purchasing extra certificates, you can increase the invested amount.
- When certificates mature, they can be reinvested in the scheme again by purchasing certificates of a value equal to the maturity value of the old ones.
- The certificates can also be taken on behalf of a minor.
- The investment can be used to secure loans.
Document required for Purchasing NSC
The documents required when purchasing a fresh set of National Savings Certificates will be:
- The application form for the investment. This is called Form 1 and allows you to declare the investment amount and the nominees.
- Other supporting documents may also be asked for and these could include:
- Proof of identity
- Proof of address
How to buy NSC
Buying an
How to buy NSC
Buying an NSC certificate is an incredibly simple process however it is NOT one which can be followed online. A National Savings Certificate can be bought from any post office and will require the submission of certain documents. Here is how you can get yourself some NSC certificates:
Step 1: Fill up the NSC application form that will collect some basic information about you and how much you want to invest.
Step 2: Submit any supporting document that might be needed.
Step 3: Nominate a beneficiary for the investment.
Step 4: Make the payment for the amount you want to invest. This payment can be made in cash or via cheques or even via a demand draft.
Step 5: Collect the certificates from the post office. It must be noted that if the payment has been made via a cheque then the certificate will only be issued upon realization of the payment made. In other cases, the certificates will be issued immediately.
Step 6: Check the certificates for clerical or mathematical errors. If there are any mistakes you can get them corrected.
is an incredibly simple process however it is NOT one which can be followed online. A National Savings Certificate can be bought from any post office and will require the submission of certain documents. Here is how you can get yourself some NSC certificates:
Step 1: Fill up the NSC application form that will collect some basic information about you and how much you want to invest.
Step 2: Submit any supporting document that might be needed.
Step 3: Nominate a beneficiary for the investment.
Step 4: Make the payment for the amount you want to invest. This payment can be made in cash or via cheques or even via a demand draft.
Step 5: Collect the certificates from the post office. It must be noted that if the payment has been made via a cheque then the certificate will only be issued upon realization of the payment made. In other cases, the certificates will be issued immediately.
Step 6: Check the certificates for clerical or mathematical errors. If there are any mistakes you can get them corrected.
