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There are a number of Post office investment schemes and one of them is the National Saving Certificate (NSC) which is a low-risk, fixed-income investment scheme. It is an initiative of the Government of India and can be bought from the nearest post office next to your place. People looking for a safe investment instrument with a steady rate of interest can invest in the National Saving Certificate. The scheme is suitable for small and medium investors to earn returns while saving the tax.
The salient features of the National Saving Certificate are:-
- The minimum amount for opening NSC-
A minimum amount of Rs. 1000 and in multiples of Rs. 100 as an initial investment is required for National Saving Certificate (NSC). This can be increased when feasible as there is no upper limit. Any number of accounts can be opened under the scheme.
- Interest payable and periodicity-
Presently the rate of interest is 6.8% per annum. It gets compounded annually but is payable on maturity.
- Who can open an NSC account?
The NSC account can be opened by a single adult, or a joint account with up to 3 adults, a guardian on behalf of a minor or on behalf of a person with an unsound mind, and a minor can also open an account on their own name if above 10 years of age.
- Maturity Period-
The maturity period is after the completion of 5 years from the date of deposit.
- Premature closure-
The NSC may not be prematurely closed before 5 years except on account of the death of a single account holder or any of the account holders in a joint account. It can also be closed on an order by a court.
- Pledging of account-
National Saving Certificate (NSC) can be pledged by submitting the application form at the post office with a supporting letter from the pledgee. Pledging can be made to a scheduled bank, co-operative society, co-operative bank, corporation, Government Company, local authority, or a housing finance company.
- Transfer of account from one person to another-
NSC can be transferred from one person to another; on the death of the account holder to the legal heir or the nominee and also on the death of an account holder to the joint holders. It can also be transferred on pledging of account to a specified authority or an order from the court.
NSC allows investors to select a nominee which can even be a minor. The investor should fill up a nomination form with the required details to avail of the nomination facility.
- Tax Saving-
It is a government-backed tax-saving scheme and an individual can claim up to Rs. 1.5 lakh under the provisions of Section 80C of the Income Tax Act, 1961.
- Power of Compounding-
The interest earned on NSC is compounded annually, reinvested, and payable at maturity.
- Documents required to be submitted for NSC-
The documents that are required to be submitted in order to invest in NSC are-
The NSC application form.
Identity proof:-Passport, PAN Card, driving license, Voter Id.
Address proof:-Telephone bill, electricity bill, passport, bank statement, etc.
Make the payment for NSC in the form of cash, cheque, or demand draft.
- How to encash the NSC certificate after maturity?
When you want to encash the maturity amount of the NSC you have to carry the following documents-
Original NSC certificate.
NSC encashment form.