A national savings certificate is a long term investment scheme with guaranteed returns. Just like fixed deposits, these are safe investment scheme with no market risk. The depositor gets fixed compounded interest as per the government norms on the principal amount deposited. Further, the depositor also gets a tax rebate under section 80C.
Who can invest in National Savings Certificate?
- Any individual above the age of 18.
- A joint account can be opened by a maximum of 3 people.
- Any minor above the age of 10.
- An investment can be made by an adult on behalf of a minor or person of unsound mind.
- Application form
- Passport size photograph
- Address Proof
- Identification Proof
- Cash or cheque deposit of the investment amount.
- All documents need to be self-attested. In case the investment is made by an illiterate, the documents need to be attested by a gazetted officer, head/chief postmaster, sarpanch, etc.
- Documents also need to be attested by the agent in case the certificate is purchased through an agent.
Key Features of National Savings Certificate
- The investor needs to invest a minimum amount of Rs. 1000/- or multiples of Rs. 100/-.
- There is no maximum limit to such investment.
- Effective 01 July 2019, the interest is payable at 7.9% per annum.
- The interest is compounded annually and is payable only at the time of maturity with the principal amount.
- The term duration is fixed for 5 years and 10 years, which means that the investor needs to deposit the amount for a period of 5 years or 10 years only.
- The investor gets a tax rebate under section 80C up to a maximum limit of Rs. 1,50,000/- depending upon the amount invested in the financial year.
- The interest payable is compounded interest and no tax or TDS is deducted from the interest.
- The interest is accrued annually and is reinvested under section 80C.
- The NSC holder can avail loan against NSC certificate from any of the Banks.
- NSC can be transferred from one person to another. In such a case, the old certificate is not discarded. Changes of title are made to the existing certificate and purchase application only. Such a certificate shall be duly endorsed by the authorized Postmaster along with his designation stamp and the date stamp of the post office.
- National Saving Certificate can be transferred or endorsed in favor of another only once from the date of issue till the date of maturity.
Premature Withdraw of NSC amount
- The maturity period of NSC is 5 years or 10 years. The amount can be withdrawn only upon completion of the maturity period.
- However, in the case of Death of the NSC holder, the legal heir can close or withdraw the amount after completion of specified documents.
Documents Required to be submitted in case of the death of the NSC holder.
- In the case of Nomination, the nominee needs to submit a nomination claim form along with the KYC documents and the Death Certificate.
- If the NSC value is less than 5 Lakhs and no nomination is made, the legal heir or family members need to submit a claim form along with documents such as death certificate, Letter of Indemnity (Annexure-I), Affidavit (Annexure-II), Letter of disclaimer of the affidavit (Annexure-III) and KYC documents of claimants, deponents, witnesses, etc.
- In case of death and no nomination made by the account holder, claims up to a limit of 5 Lakhs can be settled only after 6 months from the date of death of the depositor.
- If the deposit value is above 5 Lakhs and no nomination has been made, the claim shall be settled upon submission of the succession certificate only.