National Savings Certificate Nsc As Tax Saving Tool

National Savings Certificate (NSC) is a popular government backed post office saving scheme. This investment scheme aims to encourage people to inculcate the habit of saving and to channelize these savings towards nation building. Investing in NSC offers you safety for the money invested along with attractive interest rate, which ensures returns on your investment. It is also one of the well-known income tax saving instruments in India. NSC can be purchased from any branch of the Indian postal service and it is issued for five year maturity.

National Savings Certificate is available in electronic mode (e-mode), w.e.f April 1, 2016 and the system of physical pre-printed certificates for NSC has been discontinued. Till the CBS system transits to e-mode, post offices may issue a physical certificate recorded in a passbook.

Table Content

  • Top Reasons to Invest in NSC
  • Tax Benefits under NSC
  • Tax Deduction on Investment
  • Tax Free Interest
  • TDS Free
  • Types of National Saving Certificates
  • 1. Single Holder Type Certificate
  • 2. Joint ‘A’ Type Certificate
  • 3. Joint ‘B’ Type Certificate
  • Key Points to Know Before Investing in NSC
  • 1. Who can Invest
  • 2. Documents Required
  • 3. Tenure & Interest Rate
  • NSC Rate of Interest Over the Last Five Years
  • 4. Nomination
  • 5. Transfer
  • 6. NSC Redemption
  • 7. Premature Withdrawal
  • 8. Loan
  • Concluding Words:
  • Related posts:

Top Reasons to Invest in NSC

  • National Saving Certificate offers guaranteed returns, as interest rate is backed by the government. By default, interest earned is compounded and reinvested in the scheme.
  • You can start investing with a minimum amount of Rs 100 and it is thus extremely affordable to start investing in NSC.
  • Nomination facility is also available.
  • In case of loss or damage of certificates, you can get a duplicate copy as well.
  • You can cash in your National Saving Certificates in the post office at maturity. Premature encashment is allowed, on the death of the account holder.
  • Investment in NSC can be used to avail loans.
  • The NSC also offers tax benefits under Section 80C of the Income Tax Act. There is no tax deduction at source (TDS).

Tax Benefits under NSC

National Saving Certificate (NSC) is a widely used tax saving instrument. Let’s discuss how NSC can help you to save tax

  • Tax Deduction on Investment

    Investments made in NSC are eligible to claim a tax deduction up to a maximum of Rs 1.5 lakhs under section 80C of the Income Tax Act, 1961. It implies that an amount equal to annual investment in NSC would be deducted from your taxable income.

The NSC is issued in denominations of Rs 100/500/1000/5000/10,000 and other denominations as notified by the Central Government from time to time. You also have the flexibility to buy any number of the NSC certificate of any denominations.