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All About National Savings Certificate – In Detail

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National-Savings-Certificate

WHAT IS NATIONAL SAVINGS CERTIFICATE? 

The National Savings Certificate is the India Government based investment scheme that you can easily open with the post office. Basically, it is a savings bond that encourages investors – mainly small-mid income to invest whilst saving on income tax. A fixed-income instrument like Post Office FDs and Public Provident Fund, this scheme is a low-risk product and secure too. You can buy it from your nearby post office in your name, for a minor or with another major as a joint-account. NSC comes with two maturity periods which are fixed – 5 and 10 years. As such, there is no maximum limit of NSCs, but investments up to INR 1.5 lakh can help you tax-break under section 80C. Currently, the rate of interest is 8% p.a.  

WHO SHOULD INVEST IN NATIONAL SAVINGS CERTIFICATE? 

Anyone who is looking for a secure investment to save taxes whilst earning a steady income can go for this scheme. The NSC offers complete capital protection and better interest. However, mostly fixed-income schemes cannot deliver inflation beating returns like National Pension Scheme and tax-saving mutual funds. The government has made easy for investors by making NSC available in post offices. Only individuals can invest in NSC. Trusts and Hindu Undivided Families cannot invest in it. Also, NRI cannot purchase NSC.  

BENEFITS OF NATIONAL SAVINGS CERTIFICATE 

Given below: 

  • Fixed-incomeCurrently, you get an 8% rate of interest which is better than savings or FD. 
  • Tax-saverAs a government launched the scheme, you can invest up to INR 1.5 lakh for tax-exemption of section 80C.  
  • Start small: You can invest as low as INR 100 as a starting investment and can increase the amount as per your feasibility. 
  • Maturity periodThere are two maturity periods as said by the government – 5 years and 10 years. 
  • AccessYou can purchase NSC from your nearest post office by submitting all the documents. 
  • NominationInvestor can nominate a minor or a family member so that they can inherit it in the unfortunate tragedy of the investor’s demise.  
  • Pre-mature withdrawalYou cannot exit this scheme early, but they do accept it in exceptional cases like if there is a court order or the death of the investor.  

TAX BENEFITS OF NATIONAL SAVINGS SCHEME INVESTMENT 

Investments up to INR 1.5 lakh in the NSC can earn the investor a tax-rebate under 80C of Income Tax Act.  

COMPARING NATIONAL SAVINGS CERTIFICATE WITH OTHER TAX-SAVING INVESTMENTS 

INVESTMENT  INTEREST  LOCK-IN-PERIOD  RISK PROFILE 
       
NSC  8%  5 years  Low-risk 
ELSS FUNDS  12%-15%  3 years  Market-related risks 
PPF  8%  15 years  Low-risk 
NPS  8%-10%   Till retirement  Market-related risks 
FD  7%-9%  5 years  Low-risk 
       

Source: cleartax.in 

Now, that you know about National Savings Certificate, is this for you? If it is tax-efficiency or fixed income you are looking for, you can opt for National Savings Certificate.  

Furthermore, you can also opt for mutual funds for your investments. Talk to the team of Gulaq for the same.  

Till then, keep investing!  

 

*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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