NSCs ( VIII and IX Issue )
National Savings Certificates (NSCs) are popular as Tax Saving instruments. NSC scheme has been designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. NSCs are a long term tax saving option for investors Loan is available form banks against pledge of NSCs in their favour. The amount invested in qualifies for tax benefits under Section 80 C of Income Tax Act. The accrued interest also qualifies for benefits of Section 80C. However, the interest accrued on NSCs is taxable.
Changes in the scheme:
- The maturity period of NSCs (VIII Issue) reduced from 6 years to 5 years.
- Introduced NSC (IX issue) with maturity period of 10 years and higher interest rate of 8.70% p.a. w.e.f. 01.12.2011.
- NSC (IX issue) with maturity period of 10 years discontinued with effect from 20th December 2015.
- Interest Rates on NSCs and other small saving schemes to be changed at quarterly intervals.
Salient features of NSCs
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Any resident individual singly or jointly with other adult. Applications for purchase of NSCs may be submitted on NC-71
Parents and guardians can also purchase NSCs on single holder basis on behalf of a minor.
Non residents cannot invest in NSCs. If a resident Indian having purchased a certificate, subsequently becomes Non-Resident during the currency of the maturity period, the certificate shall be encashed or deemed to be encashed on the day he becomes a non-Resident, and interest shall be paid at the rate applicable to the Post Office Savings Account, from time to time, from such day and up to the last day of the month preceding the month in which it is actually encashed.
No maximum limit
▲Maturity period (VIII issue)
Six years for NSCs purchased upto 30th November 2011.
Five years for NSCs purchased on or after 1st December 2011.
▲Maturity period (IX issue)
|Period||VIII Issue||IX Issue
|01.12.2011 to 31.03.1012||8.40%||8.70%|
|01.04.2012 to 31.03.2013||8.60%||8.90%|
|01.04.2013 to 19.12.2015||8.50%||8.80%|
|20.12.2015 to 31.03.2016||8.50%||Discontinued|
|01.04.2016 to 30.09.2016||8.10%||-|
|01.10.2016 to 31.03.2017||8.00%||-|
|01.04.2017 to 30.06.2017||7.90%||-|
|01.07.2017 to 31.12.2017||7.80%||-|
|01.01.2018 to 30.09.2018||7.60%||-|
|01.10.2018 to 30.06.2019||8.00%||-|
The interest compounding periodicity has been changed from half-yearly to yearly since 01.04.2016.
▲Post Maturity Interest
Where on maturity the amount has become due but not paid, it shall carry interest from the date of maturity upto the date of payment at prevailing Post Office Saving Bank account interest rate.
Available except for NSCs purchased in the name of minors.
Application for Cancellation or Variation of Nomination previously made be submitted on form NC-53.
Transferable from one Post Office to another. Application for transfer of NSCs from one post office to another be submitted on NC-32
The certificate can also be transferred from one person to another with the previous consent of the Postmaster or the Head Postmaster by submitting application NC-34. The transfer can be made after expiry of a period of at least one year from the date of the certificate.
On an application being made in the prescribed Form by the transferor and transferee, the Postmaster may permit the transfer of any certificate (pledging of certificate) as a security.
The transfer is permitted only for the whole amount and not for the part of it.
Transfer of the Certificate purchased on behalf of minor is permitted only if his guardian certifies that the minor is alive and the transfer is for the benefit of the minor.
A Certificate issued upto 30th November 2011 can be encashed after Six years and the certificates issued on or after 1st December 2011 can be encashed after expiry of Five years.
The Certificate can be encashed at the Post Office at which it stands registered or it at any other Post Office subject to satisfactory verification of the identity of the presenter.
In case of certificates purchased on behalf of a minor who has since attained majority, the certificate shall be signed by such a person himself, but his signature shall be attested either by the person who purchased the certificate on his behalf or by any person who is known to the Postmaster.
In case of death of the holder, in respect of which a nomination is in force, the nominee or nominees are entitled to encash the Certificate at any time before or after the maturity.
A Certificate may be prematurely encashed in case of
- Death of the holder
- Forfeiture by a pledgee being Gazetted Government Officer when the pledge is in conformity with these rules
- When ordered by the Court of Law
If the Certificate is encashed within one year from the date of certificate, only the face value of the Certificate shall be payable.
If the certificate is encashed after expiry of one year but before the expiry of three years from the date of certificate, an amount equivalent to the face value together with simple interest at POSB rate is payable.
The amount payable after expiry of three years from the date of the certificate (VIII issue) is as under:
|Period lapsed from the date of certificate||Amount Payable
|Purchased before 30.11.2011||Purchased during 01.12.2011 to 31.03.2012||Purchased after 01.04.2012|
|> 3 years < 3 years and 6 months||121.15||123.14|
|> 3 years and 6 months < 4 years||125.09||127.49|
|> 4 years < 4 years and 6 months||129.16||131.99|
|> 4 years and 6 months < 5 years||133.36||136.65|
|> 5 years < 5 years and 6 months||137.69||Not Applicable|
|> 5 years and 6 months < 6 years||142.16||Not Applicable|
Amount invested is eligible for deduction under Section 80C. Interest accrued during the year except for the last year is deemed to be reinvested and shall also qualify for deduction under Section 80C.
No TDS is deducted on repayment.
Interest accruing annually is automatically reinvested, and such re-invested interest qualify for tax rebate under section 80C of the Income Tax Act.
No tax deduction at source.
- Loans can be availed from banks on pledge of NSCs. Application on NC-41 is required to be submitted for pledge of NSCs as security.
- NSCs are available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000
- NSCs can be purchased in Demat Form from select Post Offices.
- If a certificate is lost, stolen, destroyed, mutilated or defaced, application may be made showing particulars of the certificate with circumstances attending such loss, theft, destruction, mutilation or defacement for issue of duplicate certificate to the Post Office where the Certificate is registered. If the Officer-In-Charge is satisfied, he shall issue a duplicate Certificate on the applicant furnishing an indemnity bond in the prescribed form with sureties or with a bank\'s guarantee.
- Relevant Forms :
- NC-29 Form for Issue of Duplicate NSCs/KVPs in Lieu of the Loss / Theft / Destruction / Mutilation of NSCs/KVPs in custody of the holder
- NC-54(a) Bond of Indemnity - Issue of a duplicate certificate(s) in lieu of lost, misplaced, spoiled or mutilated certificates.
- NC-54(b) Bond of Indemnity - Issue of a duplicate certificate(s) in lieu of lost, misplaced, spoiled or mutilated certificates with a Bank guarantee.
- NC-61 Bond of Indemnity - To be executed at the time of discharge of original certificates or Issue of duplicate certificate(s) in lieu of lost, misplaced, spoilt, destroyed, defaced or mutilated certificate (s), where original application for purchase is missing.
- Annexure 1 Claim form for settlement of Savings Certificates of the deceased, where nomination has been registered.
- Annexure 2 Claim form for settlement of Savings Certificates of the deceased, where the claim is preferred on legal evidence of heirship.
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Modified : June 29, 2019