Rules for the NSC (National Saving Certificate) were implemented in May 1989, and those rules were decided based on the National Savings Scheme Rules 1987 and Government Savings Bank Act of 1873.
Rules & Guidelines For NSC
1. It can not be issued to the NRI (Non-Resident Indians) or trust. 2. Three types of NSC certificates can be issued.
- Single Holder: The certificates belongs to only one adult, or on behalf of a minor to the adult
- Joint A: Here, certificates can issue to 2 adults and payable to both
- Joint B: Here, certificates can issue to 2 adults and payable to both but payable either
3. Anyone can buy the certificate directly from the post office or by an authorized agent.
4. NSC only issued in denominations of Rs.100/500/1000/5000/10,000
5. Investors have different modes of payment, like cash, cheque, and demand draft.
6. The certificate is issued immediately after payment.
7. NSC can be transferred from one post office to another upon submission of an application form in the prescribed format.
8. For the below-given reasons, the postmaster may approve the transfer.
- Transfer of the account of a deceased holder to his or her heir
- Account holder to a court
- Joint holders to one of the joint holders
- Single holder to joint holders
9. A postmaster will only approve the transfer of a certificate to another person if the transfe. ree is eligible to buy a certificate and if the transfer request is made after 1 year of the purchase.
10. A postmaster can allow the transfer of a certificate as security to the following:
- President of India
- Reserve Bank of India
- Any scheduled bank
- Any local authority
- Cooperative society
- Housing Finance Company
11. If in case the certificate is stolen, lost, or defiled, investors have the option to apply for the duplicate from the post office where it registered.
12. Amount invested in the NSC will be tax-free; also, for the first 4 years, investors can get a tax rebate for the interest earned on the investment.
13. On maturity, there will be a tax on the interest earned on the certificate, but the originally invested amount will be tax-free.
14. If Any person wants to encash a certificate on behalf of a minor, then he/she should get a letter from the guardian attesting that the minor is alive.
15. Premature withdrawal is not allowed; excerpt the cases listed below,
- Forfeiture by a pledgee (gazetted officer)
- The demise of the account holder/holders
- Court order
16. NSC comes with the 5 years of maturity; after the maturity, the investor can withdraw the amount or can reinvest it.
17. If the investor does not withdraw the money on maturity, then he/she will get interest on the amount at the rate of post office saving account for the next two years from the date of maturity. After two years, there will be no interest paid.
18. An account can be closed after three years from the date of the last deposit. If the account holder dies, the account can be closed at any time of his or her demise.
19. NSC does not allow for more than one nominee, except certificates which have a denomination of Rs. 500 or above.