What Is National Savings CertificateIt is the fixed income investment scheme by the Government Of India for the Residents of India, which can be issued from any Post Office in favor of the investor.
This scheme is mainly designed for small to mid-income investors to start investing while saving tax at the same time. This is a low risk fixed income investment like PPF and Post Office FDs where your returns are guaranteed.
The lock-in period for the NSC is five years and not allowed for premature withdrawal. You can invest as low as 100 INR, but there is no maximum limit.
As I tell you that there is no maximum limit to invest, but the investor can save only up to 1.5 lakhs in tax.
Currently, from 1 April 2020, the returns rate on NSC is 6.8% per annum.
Who Should Invest in NSC?
If you are looking for a low-risk tax saving investment, then you can consider investing in NSC where your returns are guaranteed and can save tax up to 1.5 lakhs in tax.
Also, the interest earned on the NSC qualifies for the tax rebate for the first four years. NSC is easily accessible, and anyone can invest in it from their nearest post office.
NSC (National Saving Certificate) is only allowed for the resident of India. NRI, Trust, or Hindu Undivided Families are not allowed to invest.
What Are The Features & Benefits of NSC?
- Return on the investment is guaranteed, it is one of the most famous low risk fixed income investment for the mid & small income investors
- Previously there were two types of NSC certificates, NSC VIII Issue (5 Years) and NSC IX (10 Years) Issue. But from December 2015 “NSC IX issue” discontinued. So now only NSC VIII exists.
- The investor can save tax up to 1.5 lakh under the section 80c of the Income Tax Act
- You can start investing in the NSC as low as 100 INR
- Interest on the investment is fixed. Currently, the rate of interest is 6.8%
- Tenure for NSC is 5 years
- The investor has the option to get a loan against the NSC certificate
- The investor gets the compound interest on the investment
- There is no TDS on NSC payouts, but have to pay tax on the interest on maturity according to their tax slab
- Premature withdrawal is not allowed, except in cases like the death of an investor, etc.
Does NSC come with Tax Benefits?
Yes, NSC qualifies for the tax benefit under section 80c of the Income Tax Act. The investor can save tax up to 1.5 lakhs, also for the first four years, interest earned on the investment is eligible for the tax rebate.