The Department of Posts, through its network of post offices, is the authorized agency of the Government of India for the issue of National Savings Certificates (NSC). NSC is an investment instrument which features tax benefits, an assured rate of interest and sovereign guarantee for repayment.
Features of NSC
- The minimum value of NSC is Rs.100/-. There is no ceiling on investment in NSC. However, deduction under Section 80C of the Income tax Act, 1961 is limited to investments upto Rs.1,50,000/-. Accumulated interest is also eligible for deduction.;
- Salaried employees, government servants and businessmen can invest in NSC.
- NSC can also be purchased by or on behalf of a minor.
- Trusts and Hindu Undivided Family are not eligible. NRI are also not eligible;
- The rate of interest is 8.50% per annum for 5 years and 8.80% per annum for 10 years maturity.
- The interest is compounded half yearly and deemed to be reinvested.
- Interest is paid at the time of maturity of the NSC.
- Interest is taxable but there is no deduction of tax at source;
- Banks accept NSC as collateral security for the sanction of loans. Premature withdrawal is also permitted;
- Transfer of certificate from one person to another is permitted once during the life of the certificate for the NSC VIII and IX issues;
