National Savings Certificate

National Savings Certificate
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Any adult individual can purchase National Savings Certificate (NSC) in their 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 on behalf of a minor. Even trusts are allowed to purchase these certificates. NRIs cannot invest in NSC (VIII Issue) since there is no such provision in the rule.

Where to apply
Application for the certificate can be made to all post offices authorised to transact saving bank business.

How to apply
The application can be made in the prescribed form along with the payment, that has to be deposited with the post office directly or through its authorised agents.

Payment
The payment is to be made in cash/cheque, pay order/demand draft or by presenting a withdrawal form along with the pass book of a post office saving bank account or by surrender of matured old certificates (including National Development Bank Bonds, Social Security Certificate, Kisan Vikas Patra).

Nomination
The facility of nomination is available on all certificates (including the joint holder type), except for the certificate purchased by on behalf of a minor.

Interest rate
The rate of interest is 8% per annum compounded half yearly, payable on maturity.

Maturity period
A certificate shall mature after 6 years from the date of certificate.

Investment Limit
Any individual can subscribe to the scheme with a minimum investment of Rs 100. There is no restriction on investment in this scheme on the upper side. However, investment up to Rs 100,000 qualifies for tax deduction. Certificates are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.

Encashment
The certificates are encashable on maturity at the post office in India after the officer in-charge verifies the entitlement of the person presenting the certificate for encashment.

Premature encashment
Premature encashment of certificate (any time before 6 years) is allowed under specific circumstances only, such as death of the holder(s), forfeiture by the pledgee or under court's order. No interest is payable on encashment within one year. After one year and before three years, simple interest rate is payable at the post office savings bank's rate of 4.5% for the completed months only.
The amount payable for a certificate of Rs 100 denomination, on encashment after three years is shown below in the table.

Completed Period (Yrs) 3.0, 3.5, 4.0, 4.5, 5.0, 5.5
Amount payable (Rs) 121.15, 125.09, 129.16, 133.36, 137.69, 142.16

Tax Benefit
Deposits made in this scheme qualify for tax deduction under Section 80C of Income Tax Act subject to an upper limit of Rs 100,000.