National Savings Certificates (NSCs) are popular as Tax Saving instruments. NSCs are a long term tax saving option for investors. The salient features of NSCs are as under:
Who can purchase
Any individual singly or jointly with other adult.
A guardian on behalf of a minor.
Minimum amount
Rs. 100/-
Maximum amount
No maximum limit
Maturity period
Six years
Interest Rate
8 per cent per annum compounded half yearly.
Rs.100/- grows to Rs.160.10 on maturity.
Nomination facility
Available
Transferability
Transferable from one Post Office to another.
The certificate can also be transferred from one person to another with the previous consent of the Postmaster or the Head Postmaster. The transfer can be made after expiry of a period of at least one year from the date of the certificate.
On an application being made in the prescribed Form by the transferor and transferee, the Postmaster may permit the transfer of any certificate (pledging of certificate) as a security.
The transfer is permitted only for the whole amount and not for the part of it.
Transfer of the Certificate purchased on behalf of minor is permitted only if his guardian certifies that the minor is alive and the transfer is for the benefit of the minor.
Encashment
The Certificates can be encashed after Six years.
The Certificate can be encashed at the Post Office at which it stands registered or it at any other Post Office subject to satisfactory verification of the identity of the presenter.
In case of certificates purchased on behalf of a minor who has since attained majority, the certificate shall be signed by such a person himself, but his signature shall be attested either by the person who purchased the certificate on his behalf or by any person who is known to the Postmaster.
In case of death of the holder, in respect of which a nomination is in force, the nominee or nominees are entitled to encash the Certificate at any time before or after the maturity.
Premature Encashment
A Certificate may be prematurely encashed in case of
Death of the holder
Forfeiture by a pledgee being Gazetted Government Officer when the pledge is in conformity with these rules
When ordered by the Court of Law
If the Certificate is encashed within one year from the date of certificate, only the face value of the Certificate shall be payable.
If the certificate is encashed after expiry of one year but before the expiry of three years from the date of certificate, an amount equivalent to the face value together with simple interest is payable.
The amount payable after expiry of three years from the date of the certificate is as under:
Period lapsed from the date of certificate
Amount payable
> 3 years < 3 years and 6 months
121.15
> 3 years and 6 months < 4 years
125.09
> 4 years < 4 years and 6 months
129.16
> 4 years and 6 months < 5 years
133.36
> 5 years < 5 years and 6 months
137.69
> 5 years and 6 months < 6 years
142.16
Deduction u/s 80C
Available
Interest Taxability
Taxable.
Interest accruing annually is automatically reinvested, and such re-invested interest qualify for tax rebate under section 80C of the Income Tax Act.
No tax deduction at source.
Other features
Deposits are exempt from Wealth tax.
Loans can be availed from banks on pledge of NSCs.
NSCs are available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000
NSCs can be purchased in Demat Form from select Post Offices.
If a certificate is lost, stolen, destroyed, mutilated or defaced, application may be made showing particulars of the certificate with circumstances attending such loss, theft, destruction, mutilation or defacement for issue of duplicate certificate to the Post Office where the Certificate is registered. If the Officer-In-Charge is satisfied, he shall issue a duplicate Certificate on the applicant furnishing an indemnity bond in the prescribed form with sureties or with a bank's guarantee.
