National Savings Certificate / NSC Calculator by Nivesguru

Benefits of National Savings Certificate (NSC)

Investing in NSC offers several advantages:

Secure Investment

NSC is a government-backed savings scheme, ensuring the safety of your investment.

Competitive Interest Rates

NSC provides attractive interest rates compared to many other investment options.

Tax Benefits

The amount invested in NSC is eligible for a tax deduction under Section 80C of the Income Tax Act.

Liquidity

While NSC has a fixed maturity period, it offers liquidity through premature withdrawals nder certain conditions.

Citizenship : NSC is available to Indian citizens, including both residents and non-residents. Non-resident Indians (NRIs) are also eligible to invest in NSC.

Age Limit : There is no specific age limit for purchasing an NSC. People of all ages, including minors, can invest in NSC. For minors, the NSC account can be opened and operated by a guardian on their behalf.

Individual and Joint Holdings : NSCs can be held individually or jointly. In the case of joint holdings, you can open a joint 'A' type or 'B' type certificate, and the maturity amount is payable either to both holders or to either of them, depending on the type of certificate.

Number of Accounts : There are no restrictions on the number of NSC accounts an individual can hold. However, it's important to note that the total investment across all NSC accounts should not exceed the permissible limit.

Minors and Guardians : In the case of minors, a guardian can invest on their behalf. Minors can also hold NSC accounts in their name. The guardian is responsible for the account until the minor reaches the age of maturity.

Currency of Investment : The investment in NSC should be made in Indian Rupees (INR) only.

Trusts, Societies, and Other Entities : Apart from individuals, NSCs can also be purchased by trusts, societies, and other organizations. The account should be operated as per the terms and conditions set by the respective post office or bank.

Permissible Investment Amount : There is no upper limit on the investment amount in NSC, but the minimum investment amount is INR 100. It's important to note that the investment is eligible for a tax deduction under Section 80C of the Income Tax Act, subject to a maximum limit of INR 1.5 lakh per financial year.

Tenure and Lock-in Period : NSC has a fixed maturity period, which is typically 5 years. The investment is locked in for this period. Premature withdrawals are allowed under specific circumstances, such as the death of the account holder or court orders.

Nomination : It is advisable to nominate a person to receive the proceeds of the NSC in the event of the account holder's death. The nomination can be done at the time of opening the NSC account or during the tenure of the account.

Taxation : The interest earned on NSC is added to the investor's taxable income. However, the amount invested in NSC is eligible for a tax deduction under Section 80C of the Income Tax Act.

Investing in NSC is not only simple but also offers competitive interest rates. Here's what you need to know:

NSC Investment Value

The minimum investment amount for NSC is INR 100, and there is no upper limit. NSC has a fixed maturity period, typically 5 years.

Current Yearly Interest Rate

The interest rate on NSC is subject to change, but it is generally higher than many other government-backed savings schemes. The interest is compounded annually and added to the principal amount.

Corpus and Maturity Value

The maturity value of NSC can be calculated using the NSC calculator provided by the Post Office. The interest earned on NSC is also eligible for tax benefits under Section 80C of the Income Tax Act.

4. How to Check NSC Balance

Checking your NSC balance is a crucial step in managing your investment. You can do this by visiting the post office or bank where you hold your NSC account. Provide your NSC certificate details to inquire about your current balance and accrued interest.

5. How National Savings Certificate (NSC) Works

NSC operates as a long-term savings instrument. Here's how it works:

• You invest a certain amount in NSC for a fixed duration, typically 5 years.
• The interest rate is determined at the time of investment and remains fixed throughout the maturity period.
• The interest is compounded annually and added to the principal amount.
• After the maturity period, you receive the accumulated amount, which includes the principal and interest earned.

Tax Deduction Under Section 80C

- The amount invested in NSC is eligible for a tax deduction under Section 80C of the Income Tax Act. Section 80C allows for deductions on various financial instruments and expenses, including NSC.

- The maximum limit for claiming deductions under Section 80C is INR 1.5 lakh per financial year. This means that the combined total of investments and expenses eligible for a deduction under Section 80C should not exceed INR 1.5 lakh.

Tax Reduction on Principal Amount

- You can claim a deduction on the principal amount invested in NSC. The deduction reduces your taxable income, which, in turn, can lead to a lower income tax liability.

- For example, if you invest INR 50,000 in NSC, you can claim a deduction of INR 50,000 under Section 80C for the financial year in which the investment was made.

Tax on Interest Earned

- While the amount invested in NSC is eligible for a deduction, it's important to note that the interest earned on NSC is considered taxable income.

- The interest earned is added to your taxable income in the year it accrues and is taxed as per your applicable income tax slab.

Tax Benefit Under Section 10(4B)

- Under Section 10(4B) of the Income Tax Act, any interest that accrues on an NSC is deemed to be reinvested and is eligible for a deduction under Section 80C.

It's important to maintain the NSC certificates and receipts as proof of your investment. These documents may be required by the Income Tax Department if your tax return is audited or scrutinized. Additionally, tax laws and rules can change, so it's advisable to consult a tax professional or financial advisor for the most up-to-date guidance on tax benefits and investments like NSC.

Step 1: Visit a Post Office or Authorized Bank

NSCs can be purchased at any post office or designated banks across India. Locate a nearby post office or bank branch that offers NSC services.

Step 2: Fill the Application Form

You will need to fill out the NSC application form, which is readily available at the post office or bank. Ensure you provide accurate information and complete all required details.

Step 3: Choose the Investment Amount and Type

Decide on the amount you want to invest in NSC. You can choose between the following NSC variants:

• Single Holder Type Certificate: Can be purchased by an individual.
• Joint A Type Certificate: Can be purchased jointly by two adults.
• Joint B Type Certificate: Can be purchased jointly by two adults, but the maturity amount is payable to either of them.

Step 4: Submit Necessary Documents

Submit the filled application form along with the required documents. Typically, you'll need proof of identity, proof of address, and passport-sized photographs.

Step 5: Make the Payment

Pay the investment amount either in cash or through a cheque. Once the payment is made, the NSC certificate will be issued to you.

Payment Online/Offline, Withdrawal Rules, Closure Rules

Withdrawal Rules

NSCs have a fixed maturity period, typically 5 years. However, they can be prematurely encashed under certain conditions, such as the account holder's death or if ordered by a court.

Payment Options

You can purchase NSCs by making payment in cash or through a cheque. Some banks and post offices may also offer online payment options for purchasing.

Closure Rules

To close an NSC account prematurely, you'll need to visit the issuing post office or bank and submit the necessary documents. The rules and conditions for closure may vary depending on the circumstances.

What is National Savings Certificate (NSC)?

NSC is a government-backed savings scheme in India that offers a fixed interest rate and tax benefits. It is issued by the Department of Posts under the Ministry of Finance, Government of India.

How do I invest in NSC?

To invest in NSC, visit a post office or authorized bank, fill out the application form, provide the required documents, choose the investment type, and make the payment.

What is the minimum and maximum investment amount for NSC?

The minimum investment amount is INR 100, and there is no maximum limit. However, the maximum amount eligible for a tax deduction under Section 80C is INR 1.5 lakh.

What is the maturity period of NSC?

The standard maturity period for NSC is 5 years.

Can I withdraw NSC prematurely?

Yes, NSCs can be prematurely encashed under specific circumstances, such as the death of the account holder or court orders. However, there may be applicable rules and penalties for premature withdrawals.

Is the interest earned on NSC taxable?

Yes, the interest earned on NSC is considered taxable income. It is added to your taxable income and taxed as per your applicable income tax slab.

Can NRIs invest in NSC?

Yes, both resident and non-resident Indians (NRIs) are eligible to invest in NSC.

What documents are required to invest in NSC?

The typical documents required include proof of identity, proof of address, passport-sized photographs, a filled NSC application form, and, if applicable, a nomination form.

What is the tax benefit for NSC investments?

The amount invested in NSC is eligible for a tax deduction under Section 80C of the Income Tax Act, subject to a maximum limit of INR 1.5 lakh per financial year.

How is the interest on NSC calculated?

The interest on NSC is calculated annually and compounded. The exact interest rate may vary and is set by the government. You can check with your post office or bank for the current rate.

Can NSC certificates be transferred to another person?

Yes, NSC certificates can be transferred from one person to another under certain conditions, such as due to the death of the account holder.

Can I take a loan against NSC?

NSCs can be used as collateral to secure loans, but they cannot be pledged as security for loans.

What are the rules for NSC post office?

An individual must not be a non-resident Indian citizen. No age limit for an individual to invest in NSC. An investor can purchase NSC from an Indian Post Office for a maturity period of 5 years. The minimum investments must be Rs 100 and no maximum limit on the investment amount.

Can I withdraw NSC before maturity?

No, NSC can no be closed before 5 years of time mark. Unless there is some exceptional cases such as a valid law court order or death of the account holder. If the NSC prematurely withdrawn within a year then no interest will be payable other than the investment amount.

How much interest on NSC after maturity?

The term is already fixed at five years. This is because the NSC matures in 5 years. The interest is fixed at 7%. This is the current interest rate announced by the Ministry of Finance as of January 1st, 2023.