NATIONAL SAVINGS CERTIFICATE

A savings bond promoted by the Government of India.

 

DETAILS AND FAQ

 

National Savings Certificate can be bought by any Resident Individual in his/her name, jointly with another adult or on behalf of a minor. Deposits are accepted through post offices.

 

  1. Currently, there is only one issue available (NSC VIII issue) with a maturity period of 5 years.
  2. There are 3 types of certificates available:
  • Single Holder Type Certificate – issued to the holder himself or on behalf of a minor
  • Joint A Type Certificate – issued jointly to 2 adults and payable to both holders on maturity
  • Joint B Type Certificate – issued jointly to 2 adults but payable to either holder on maturity
  1. Minimum amount of investment is ₹100 and there is no maximum limit. The Certificates can be bought in denominations of 100, 500, 1000, 5000 and 10000.
  2. The current rate of interest is 7.8% compounded annually. The rate of interest will now be reviewed every quarter by the Government.
  3. The interest is taxable. However, the interest accrued is deemed to be re-invested and is paid out only on maturity. Therefore, the individual is required to first disclose the interest as income and then claim a deduction under section 80C.
  4. There is no tax deduction at source (TDS).
  5. The Certificate is redeemable only on maturity by submitting the Certificate to the post office.
  6. Redemption before maturity is possible only on the death of the holder or when ordered by a court of law.
  7. If the Certificate is not redeemed on maturity, the post office continues to pay simple interest for a maximum of 2 years at the rate of a post office savings account.
  8. If planned well, NSC can be a tool for retirement planning and a source of income post retirement. For example, if an individual invests in NSCs every year for 10 years starting 5 years before his retirement age, he ensures a constant source of income for 10 years post retirement.