National Savings Certificate (NSC) is a tax saving investment that can be purchased from any post office by an Indian Resident. Being a fixed return and low risk Government of India-backed investment, NSC is usually preferred by risk-averse investors or those seeking to diversify their portfolio through fixed return instrument.
The interest rate is subject to periodic change as per the decisions taken by the Finance Ministry. The applicable NSC interest rate for Q4 FY 2018-19 (January – March 2019) is 8%. It was hiked from 7.6% to 8% in October 2018. The NSC is compounded annually but payable only at maturity.
The different modes of holding National Savings Certificate are as follows:
Single Holder Type certificate: Single holder certificate can be purchased by an investor for self or on behalf of minor.
Joint A Type certificate: In this case, the certificate is held by two investors with equal share of maturity proceeds.
Joint B Type certificate: This is also a joint holding certificate however the maturity proceeds are paid out to only one of the holders.
The following are the key eligibility criteria for making National Savings Certificate investments:
Investing in National Savings Certificates –
NSC can be bought from any India Post Office on submission of required KYC documents. Currently online purchase of NSC is not possible.
Documents Required –
NSCs can be transferred from one post office to another as well as from one person to another without impacting interest accrual/maturity of the original certificate.
Transfer from one post office to another can be made by filling out and submitting Form NC-32 at the post office which earlier issued the original certificate.
Transfer of National Savings Certificates can also be made from one holder to another by filling out Form NC-34 at the NSC issuing post office. This can be done only once till time of scheme maturity.
NSC has a lock in period of 5 years with premature withdrawal permitted only in specific cases such as –