National Saving Certificates (NSC) National Savings Certificate, popularly known as NSC is an assured investment scheme.

It is a timetested instrument providing double benefits; one is tax savings and the other is adequate returns with high safety. They facilitate long-term safe saving options for the investor. NSCs are a good investment option for salaried class people, businessmen as well as government employees. When you buy a NSC for a particular value, the interest compounded is returned along with the principal amount only after the maturity. It is a cumulative scheme wherein the interest is reinvested. The duration for an NSC is 6 years. Owing to it being time-bound, NSCs have low liquidity. NSCs are available at all post offices across the country. They are issued by the Department of Post. Many middle class people in the country buy NSCs for saving tax as well as to earn decent return on their investment. Though NSC has much competition from other investment options like shares and mutual funds, yet it is highly popular owing to its respectable returns which are government guaranteed as well as tax-exempt. Interest and Returns NSC attracts interest rate of 8% per annum compounded half-yearly. Because of compounding, the effective rate of interest comes to 8.16%. NSCs are under a cumulative scheme and the entire interest earned every year is reinvested. It is paid along with the principal amount only after the maturity of the certificate. For example, if a person invests Rs. 10,000 in NSC today, he will receive Rs. 16,010 after 6 years. Features of National Savings Certificate Pre-mature encashment is not permissible. Reinvestment of the annual interest earned. Post office savings account interest benefit for 2 years, if amount is not drawn at maturity. Reinvestment of amount after maturity is allowed. Loan can be availed against the security of the certificate. Nomination facility available. Transferable from one Post office to another. Transferable from one person to another. Duplicate Certificate issued in case the certificate is lost, stolen, mutilated or defaced.

Types of NSCs and Eligibility Any adult individual can buy NSC for himself or on behalf of a minor. Two adults can jointly buy the certificate. Even a trust can buy NSCs. There are basically 3 types of certificates that can be bought by individuals: Single Holder Type Certificate: This certificate can be bought by an individual in his name or on behalf of minor, or a trust. Joint 'A' Type Certificate: this certificate is issued to 2 adults jointly and is payable to both holders jointly or to the survivor. Joint 'B' Type Certificate: This certificate is issued to 2 adults jointly payable and is payable to either of the holders or to the survivor. How and Where to Apply

NSCs can be purchased at authorized post offices and all head post offices across the country. A person can apply for an NSC in a prescribed manner at any of the post offices. NSC can be applied for in person or through an agent. Agents for this purpose are active in every nook and corner of the country. NSCs are available in denominations of Rs. 100, Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000. Minimum purchase is for Rs. 100 and there is no maximum limit to the purchase of NSCs. A person can invest as much as his budget allows. Payment for NSCs can be made in cash or by a locally executed cheque or order or through a demand draft in favor of postmaster. A duly signed withdrawal form along with passbook to enable withdrawal from savings account of post office could also be used as a payment mode. Also payment can be made by surrendering a matured old certificate discharged as Received payment through issue of fresh certificate vides application attached. Encashment The NSC can be encashed at any registered or authorized post office. The authority needs to be satisfied with the identity of the person presenting the certificate. On receipt of the amount, the receiver signs the back of the certificate as a proof of receipt. The NSCs can also be encashed through banks or by transferring them to the desired post office. If the certificate is purchased on behalf of a minor, and at the time of maturity the minor has attained the age of adult, then that recent adult needs to sign the certificate. The signature needs to be attested by the person who bought the certificate in his behalf or by the postmaster. The maturity period of NSC is 6 years. Generally pre-mature encashment is not allowed but in cases like death of the holder, forfeiture by the nominee or courts order, the NSC can be encashed prematurely. Tax benefits Deposits in NSCs up to Rs. 1 lakh can be availed as deduction under Section 80C of the Income Tax Act. The annual interest earned is deemed to be reinvested and thus qualifies for the deduction under Section 80C.

What is National Savings Certificate? National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at all post office counters in the country. This scheme is specially designed for Government employees, Businessmen and other salaried classes who are IT assesses. It is a long term safe savings option for the investor. Trust and HUF cannot invest. The scheme combines growth in money with reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is 6 years. Features NSCs are issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000 for a maturity period of 6 years. There is no prescribed upper limit on investment. Individuals, singly or jointly or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent. One person can be nominated for certificates of denomination of Rs. 100- and more than one person can be nominated for higher denominations. The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer. They can also be transferred from one post office to another. One can take a loan against the NSC by pledging it to the RBI or a scheduled bank or a cooperative society, a corporation or a government company, a housing finance company approved by the National Housing Bank etc with the permission of the concerned post master. Though premature encashment is not possible under normal course, under sub-rule (1) of rule 16 it is possible after the expiry of three years from the date of purchase of certificate. Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88. Investment up to Rs. 1,00,000/- per annum qualifies for IT Rebate under section 80C of IT Act. Return It is having a high interest rate at 8% compounded half yearly. Post maturity interest will be paid for a maximum period of 24 months at the rate applicable to individual savings account. A Rs1000 denomination certificate will increase to Rs. 1601 on completion of 6 years. Interest rates for the NSC Certificate of Rs 1000 Year Rate of Interest

1 year 2 year 3 year 4 years 5 years 6 years

Rs 81.60 Rs 88.30 Rs 95.50 Rs103.30 Rs 111.70 Rs 120.80

Advantages Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88. NSCs can be transferred from one person to another through the post office on the payment of a prescribed fee. They can also be transferred from one post office to another. The scheme has the backing of the Government of India so there are no risks associated with your investment. How to start? Any individual or on behalf of minors and trust can purchase a NSC by applying to the Post Office through a representative or an agent. Payments can be made in cash, cheque or DD or by raising a debit in the savings account held by the purchaser in the Post Office. The issue of certificate will be subject to the realization of the cheque, pay order, DD. The date of the certificate will be the date of realization or encashment of the cheque. If a certificate is lost, destroyed, stolen or mutilated, a duplicate can be issued by the post-office on payment of the prescribed fee.

Features

Returns NSC provides an interest rate of 8.0% which is compounded half yearly. Investment Limitation Min Amount Rs. 100/- and additional investment in multiples of Rs. 100/Max Amount No Limit

Denominations Rs. 100/-, 500/-, 1,000/-, 5,000/-, 10,000/-, 50,000/Scheme Availability All through the year. Mode of Operation Single Joint (Two or more)

Minor with parent/guardian HUFs

Tenure of Investment The NSCs have a maturity period of 6 years. Premature Encashment If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a year but before 3 years, then simple interest on the face value, at the rate applicable from time to time, will be paid. The difference between the accrued interest and the simple interest is the discount rate. The Government from time to time specifies the discount rate. Maturity The certificate can be encashed from the issuing post office on the due date by simply discharging the certificates at the back. Transferability The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer. Loans / Withdrawal One can avail of a loan against the certificates by pledging it to the bank. The bank will have the NSC assigned in its favour and advance a percentage of upto 75% of face value plus the amount of accrued interest till the date of taking the loan. Tax Benefits Tax benefits are available on amounts invested in NSC under section 88, and exemption can be claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88. Tips for Investing An useful instrument for people who invest to save tax. Terms Denominations The certificate is issued in denominations of Rs. 100/-, 500/-, 1,000/-, 5,000/-, 10,000/- & 50,000/- and any other denomination as may be announced by the Central Government. Eligibility for NSCs NSCs are issued to Individuals, Joint (two or more) and Minor with Parent/Guardian. There is a further classification when the certificate is issued to Joint holders Type 'A' - maturity is payable to both the holders or the survivor.

Type 'B' - maturity is payable to either or survivor. Purchase of Certificate Any individual or including body corporate can purchase a NSC by applying to the Post Office through a representative or an agent. Payments can be made in cash, cheque or DD or by raising a debit in the savings account held by the purchaser in the Post Office. Issue of Certificate The issue of certificate will be subject to the realization of the cheque, payorder, DD. The date of the certificate will be the date of realization or encashment of the cheque. On request from the purchaser the Post Office will issue an identity slip along with the certificate. The identity slip shall be signed by the holder / holders and retained by them. This is to facilitate the purchaser to get a duplicate certificate from loss of the same and also to ensure a smooth encashment of the certificate on maturity.

Duplicate Certificate A duplicate certificate is issued to the holder by the Post Office if he / she reports a loss of the certificate arising out of theft, mutilation, defacement. If the application is made to any other Post Office other than the issuing Post Office, the Post Office will forward the application to the originating Post Office. The application will have the details of the certificate number, amount, date of purchase / maturity etc. and the circumstances resulting in the loss of the certificate. In such case the identity slip comes handy for a duplicate certificate. Upon satisfactory verification of the supporting the Post Office will issue a duplicate certificate. The holder will have to furnish an indemnity bond / declaration / bank verification on demand by the Post Office as a fulfillment condition for a issue of a duplicate certificate. Nomination The single holder or joint holders of a certificate as the case may be, may, by filing in necessary particulars at the time of purchasing the certificate, nominate any person who, in the event of death of the single holder or both the joint holders, as the case may be, shall become entitled to the certificate and to the payment of amount due thereon. If such nomination is not made at the time of purchasing the certificate, it may be made by the single holder, the joint holders or the surviving joint holder, as the case may be, at any time after the purchase of the certificate but before its maturity, by means of an application to the Postmaster of the office at which the certificate stands registered. Only one nominee is allowed for a certificate which is below Rs. 500/-. Nomination facility is not allowed for or on behalf of minor. A nomination made by the holder or holders of a certificate can be changed or cancelled by submitting an application affixing a revenue stamps of the value of Rs. 1/- on every application made with the certificate to the postmaster of the Post Office at which the certificate was purchased. However a separate application for registering a nomination or cancellation must be made for certificates purchased on different dates. There is no fee for any nomination made for the first time. The nomination or the cancellation of a nomination or

the variation of a nomination shall be effective from the date it is registered in the Post Office, which shall be noted on the certificate. If any nomination is not registered at the time of purchasing the certificate, it may be made by the single holder, the joint holders or the surviving joint holder, as the case may be, at any time after the purchase of the certificate but before its maturity, by means of an application to the Postmaster of the office at which the certificate stands registered. The clause that the money arising out of the maturity proceeds may be paid to the nominee mentioned in the certificate in the event of death of a single / joint holders or surviving joint holder has to be incorporated at the time of purchasing the certificate. Encashment NSCs are encashable only at the issuing Post Office. In the event of the certificate being presented for encashment at any other Post Office the paying Post Office will insist on the identity slip issued to the holder at the time of purchase which should be provided. Transfer from one Post Office to another A certificate may be transferred from one Post Office from where it was purchased to any other Post Office from the holder or holders by making an application in the form laid down by the Director General Posts at either of the two Post Offices. The application shall be signed by the holder or holders provided that in the case of joint type certificate, the application may be signed by one of the holders if the other is dead. Transfer from one person to another A certificate may be transferred from one person to another on consent in writing of an application to the officer of the Post Office as specified below The transfer of cases in which transfer can be sanctioned by Head Postmaster or Sub Postmaster of the Post Office where the certificate was issued. From an employer to an employee on whose behalf it was purchased. From a Co-operative Bank / Society, the Reserve Bank of India or a Scheduled Bank to its client / member or from a Gazetted Government Officer or from a local authority to a person or body or fund on whose behalf the certificate is held, when the certificate was not issued in the name of such person or body or fund. From the name of a deceased holder to his heir. From a holder to a court of law or to any other person under the orders of a court of law. From a single holder to joint holders. From joint holders to the name of one of the joint holders or surviving holder. An authorised Postmaster shall give his consent to the transfer of a certificate only if the following conditions are satisfied, namely : 1. The transfer of the certificate is effected after its completion of one year from the date of issue of the certificate or where the

transfer is effected before this period. Transfer is to a natural relative or is out of natural love and affection. Marking a LIEN On an application being made in the prescribed form by the transferer and the transferee, the Postmaster of the office of the registration may, at any time, permit the transfer of any certificate as security to the President of India or Governor of a State in his official capacity the Reserve Bank of India or a scheduled bank or a comparative society including a cooperative bank a corporation of a Government company and a local authority When any certificate is transferred as security, the NSCs stand as security and is assigned in favour of the body which is advancing, the Postmaster of the office of the registration shall make the following endorsement on the certificate, namely " Transferred as security to . " Lien Marked in favour of ------------------------------The transferee of a certificate under this rule shall, until it is reassigned under sub-rule (4), be deemed to be the holder of the certificate. A certificate transferred under sub-rule(2), may, on the written authority of the pledgee, be re-assigned with the previous sanction in writing of the authorised Postmaster and when any such re-transfer is made, the Postmaster of the office of registration shall make the following endorsement on the certificate, namely " Re-transferred to . " LIEN REMOVED-----------------------------2.

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National Savings Scheme (NSS) offers an assured return and tax rebates under Income Tax Act. The rate of interest is 9 per cent per annum, compounded annually. NSS is available at post offices across India. You can open only one account in a year. There is no prescribed upper limit to the amount you might want to invest in the scheme. NSS is mostly viewed upon as a tax-saving instrument. It combines growth in money (capital appreciation) with cuts in tax outgo. Since the NSS has a fixed rate of return, it cannot provide adequate safeguards against high inflation rates, but it helps as an instrument to reduce income tax liability.

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