Tax SavingTaxation

NSC National Saving Certificate Interest Rates & Tax Deduction

NSC National Saving Certificate Interest Rates & Tax Deduction

National Saving Certificate is an investment option by which an individual can invest his income to get a fixed interest. You can reinvest the interest earned and benefit from an 80C deduction under income tax. We will discuss the complete detail about National Saving Certificate (NSC) VIII Issue like who can apply, where to apply NSC, how to apply NSC, nomination, denomination, interest rate, etc. You can ask your queries about National Saving Certificate (NSC) via a comment form.

Scheme NameNational Saving Certificates (NSC) VIII Issue
Who Can ApplyAny Individual
Where to Apply Post Office, Public Sector Banks, ICICI Bank, Axis Bank, HDFC Bank
How to ApplyPayment to Post Office/Bank
Aadhaar NumberRequired to Submit
NominationAvailable
Min DepositRs.1000 w.e.f. 12-12-2019
Interest Rate6.8%
Maturity Period5 Years
Income Tax Benefits1,50,000 u/s 80c

In case of no nomination:

(i) If the eligible amount in the account does not exceed Rs.5, the claimant must attach a death certificate, passbook, affidavit, letter of disclaimer, and bond of indemnity.

(ii) If the eligible amount in the account exceeds Rs.5 Lakh, the claimant should submit the succession certificate issued by the court along with the claim form, passbook, and death certificate.

Who can Apply NSC?

  • Any adult individual can purchase NSC VIII Issue, in his name (single holder type) or jointly with another adult individual with the condition ‘jointly or survivor’ (A-type) or ‘either or
    survivor’ (B type).
  • Besides, parents, and guardians can also purchase these (single holder type) certificates on behalf of a minor. Issue of these certificates to banks, companies, corporations, and other institution
    has been discontinued w.e.f. 1.4.1995.
  • W.e.f. 13.5.2005, a HUF cannot purchase NSCs.’Before 2.8.2001, the Karta of a HUF was allowed to purchase NSCs in his name jointly with any adult co-parcener, without adding the word ‘HUF.’ In such cases, the tax benefit would be allowed to the HUF. In the opinion of the Board of Editors, this position should prevail w.e.f. 13.5.2005 also.
  • Non-resident Indians cannot invest in NSCs (VIII Issue). W.e.f. 3.10.2017, if a resident holder subsequently becomes non-resident, the certificate shall be deemed to be encashed on that date, and it shall earn interest at P.O. Savings A/c rate till it is actually encashed.

Where to apply for NSC?

  • Any post-office who are registered or approved by a Government agency is authoritative to release NSC certificates, so anyone can purchase a redeemed NSC at any time when he is willing to have an NSC certificate.
  • All public sector banks and ICICI Bank, Axis Bank, and HDFC Bank are authorized on this behalf.

How to apply NSC?

  • The application in the prescribed form and the payment have to be deposited with the Post-Office/Bank directly through its authorized agent.
  • The payment is to be made in cash or by cheque/pay order/demand draft or by presenting a withdrawal for, along with the passbook of a Post-Office Savings Bank Account or by Surrender of a matured old certificate (including National Development Bonds, Kisan Vikas Patra, etc.).
  • Payment can also be made by electronic mode if certificates are purchased from post offices working on the CBS platform.
  • An applicant should. Furnish his Aadhaar number or proof of enrolment for Aadhaar at the time of application.
  • Existing NSC holders are also required to furnish their Aadhaar number latest by 31.3.2019.

Subscription of NSC

W.e.f 1-7-2016, NSCs VIII issue may be issued for any amount above Rs.100 and in multiples of Rs.100. One transaction of an investor on a day shall result in one certificate in e-mode or one entry in the passbook. Earlier, NSCs were issued in the denomination of Rs.100, Rs.500, Rs.1000, Rs.5000 and Rs.10,000.

NSC Interest Rate

Currently, the rate of interest is 6.8% per annum. The amount of interest accruing on a certificate of Rs. 100 shall be as follows:

Financial YearInterest Rate
Currently, the rate of interest is 6.8% w.e.f. 1-4-20206.8%
On NSC certificates issued during 1-7-2019 to 31-03-20207.9%
On NSC certificates issued during 1-10-2018 to 30-06-20198%
On NSC certificates issued during 1-7-2017 to 31-12-20177.6%
On NSC certificates issued during 1-7-2017 to 31-12-20177.8%
On NSC certificates issued during 1-4-2017 to 30-6-20177.9%
On NSC certificates issued during 1-10-2016 to 31-3-20178.0%
On NSC certificates issued during 1-4-2016 to 30-09-20168.1%
On NSC certificates issued during F.Ys. 2013-14 to 2015-168.5%
On NSC certificates issued during F.Y.2012-138.6%
On NSC certificates during 1.12.2011 to 31.3.20128.4%
On NSC certificates issued up to 30.11.20118%

On certificates issued w.e.f 1.4.2016, interest shall be compounded yearly. On certificates issued up to 31.3.2016, interest shall be compounded half-yearly.

Check – Benefits Of Opening PPF Account in State Bank of India

Nomination NSC

In case of no nomination w.e.f. 12-12-2019

(i) If the eligible amount in the account does not exceed Rs.5, the claimant must attach a death certificate, passbook, affidavit, letter of disclaimer, and bond of indemnity. 

(ii) If the eligible amount in the account exceeds Rs.5 Lakh, the claimant should submit the succession certificate issued by the court along with the claim form, passbook, and death certificate. 

  • The nomination facility is available on all certificates (including the joint-holders type), except for the certificates purchased by or on behalf of a minor.
  • In case of no nomination, payment up to Rs. 1,00,000 can be made to the legal heirs of the deceased holder even in the absence of Probate or Letter of Administration or Succession Certificate.

Note: It may be noted that the Supreme Court has held that if a person holding an NSC or an insurance policy dies, his legal heirs would have the sole right over the money on maturity rather than the nominee mentioned in. the certificate.  The nomination only indicated the person who was authorised to receive the money. Amount paid to the nominee becomes the estate of the deceased and devolves upon all persons who are entitled to succession under law, customs, or will of the deceased.

NSC e-Mode Certificate

  • W.e.f. 1-7-2016, physical pre-printed certificates shall be discontinued, and NSCs shall be issued either on exclusive electronic-mode or passbook mode.
  • Issue of NSC shall be conveyed to the investor electronically (by email/on mobile).
  • NSC in e-mode can be accessed online only by the investor through electronically secure means.
  • Under passbook mode, NSC shall be issued in prescribed format printed on the passbook under the authorized official’s signature.

NSC Maturity

The maturity period for NSC was six years, but recently, the period is now five years for the NSC VIII issue. For general understanding, if the value of the certificate is Rs. 100 then on its maturity, the compounded amount one gets is Rs. 160.10. The maturity amount can even be re-invested. The maturity value of any other value is charged under a proportionate rate.

The amount payable on maturity for a certificate of Rs.100 denomination (proportionately for other certificates) shall be –

For certificated issued up to Amount
1-4-2013 to 31-03-2016151.62
1-4-2016 to 30-09-2016147.61
1-10-2016 to 31-3-2017146.93
1-4-2017 to 30-06-2017146.25
1-7-2017 to 31-12-2017145.58
1-1-2018 to 30-09-2018144.23
1-10-2018 to 30-06-2019146.93
1-7-2019 to 11-12-2019146.25
12-12-2019 to 31-03-2020 (F.V. Rs. 1000)1462.54
1-4-2020 (F.V. Rs. 1000)1389.49

Loan on NSC

The amount of loan depends on the bank from which you are going to apply. Once you have an NSC certificate, you can reach any nearest scheduled bank or any cooperative bank for a loan. It is better to approach any known bank from where you have a close relationship because every bank has its own banking rules. Obtaining a loan or overdraft through this certificate is flexible and straightforward. It is neither expensive nor a complicated process compared to any other unsecured loan like credit loans or credit cards used to have.

NSCs Income Tax Benefits

Amount invested in NSC-VIII issue along with PPF/LIC/ULIP etc., up to a maximum of Rs. 1,50,000 is eligible for deduction u/s 80C. Interest accrued during the year (except for the last year) shall be deemed to be reinvested and shall also qualify for deduction u/s 80C.

So being a government-oriented instrument you have the security that the money will not die and would be used for good purpose with the fact that you get good return. So choose your NSC certificate with ingenuity and practically.

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