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National saving certificate: FAQs

1. What is National savings certificate?
It is Indian government's savings bond, used for small income tax free savings investment, issued by postal service of India. NSC are of two types viz. NSC issue VIII and NSC issue IX.
2. Where you can get National savings certificate?
National savings certificate can be purchased from any post office of India. From, August 2016, you can withdraw national savings certificate from any post offices as well. 
3. Who can buy National savings certificate?
National savings certificate can be bought by any adult on his name or name of a minor, a minor, any two adults jointly.
4. National savings certificate Maturity?
NSC Issue VIII : 5 years
NSC Issue IX: 10 years
Certificates cannot be withdrawn prematurely.

5. National savings certificate interest rates?
8.1% . Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 147.61 after 5 years.
6. How much one can invest in National savings certificate?
 Minimum Rs. 100/- can be invested in NSC. There is no max limit of investment. Though, investment upto Rs. 1,00,000/- per annum qualifies for Income tax rebate under section 80C of income tax act.
7. What are the documents require for application of NSC?

KYC forms are to be filled for applying for NSC.
You shall require:
1. PAN Card and
2. Address Proof.
3. A cheque in the name of "Head Post Master, Respective Post office".
4. 2 Passport size photographs.
8. How to buy National savings certificate?

  • Fill up the NSC application form. 
  • Submit the application form along with cheque and other proofs. 
  • Nominate a beneficiary for the investment. 
  • receive the NSC account book after 10 to 15 days. 

 8. Benefits of National savings certificate?
Let me tell you a story of Mr. Vijay. Mr. Vijay was working in an MNC company. He wanted to save on Income tax, he thought of some options as PPF, NSC etc. He devoted Rs. 5000/- per month on NSC. He opened an NSC account with Post office( Now a days, post offices issue Booklet of NSC, in which you open NSC account once and can deposit money as and when require without further KYC requirement.) and started depositing 5000/- per months. At the stage of first years Income tax declaration he got Rs. 60,000/-  + Interest tax free. For 5 years he is getting Rs. 60,000/- rebate every year. After 5 years, he is getting return of 5,000/- as Rs. 7381/- per month. At this stage, he have 2 options, one to reinvest this Rs. 7,381/-  per month for the next 12 months and rebate 7,381/- x 12 = 88,572/- from income tax. second option is to keep investing Rs. 5,000/- along with 7,381/- per month and can rebate  Rs. 1,48,572/- each year. After 10 years he will have enough money to get complete 1,50,000/- rebate from NSC itself. But, there is one drawback, interest of Rs. 2,381/- is taxable, hence you have Rs. 28,572/- worth taxable income after 12 months and the same will be compounding. But, at the end of 60 years, he will have enough of NSCs which can be used as pension for the retirement life. 
Let's describe benefits:

  • Up to Rs. 1,50,000/- is Tax free.
  • Interest is virtually tax free until interest earned in last year. 
  • There is no upper limit on investment. 
  • The interest is compounding. 
  • When NSC matures, it can be reinvested with interest. 
  • The NSC can be used to secure loans. 

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