NATIONAL SAVINGS CERTIFICATE
The national savings certificate is an investment scheme that can be opened up with any post office in India. It is a fixed income scheme initiated by the government of India enabling the investors to save on taxes while investing in this savings bond. It is mainly targeted towards small and mid-income investors while anyone can opt for this scheme. This scheme like bank FDs or PO RDs or PPF is a low-risk scheme good for risk-averse people. There are two options in the maturity period; 5-year scheme and 10-year scheme.
Although there is no cap on the maximum amount of scheme but an investment only up to Rs. 1.5 Lakh will fetch tax benefits under the Income Tax Act’s section 80C. the government keeps on revising the rate of interest every quarter which presently is 7.6%. the interest earned on the principal amount is added back and compounded annually till the time of maturity.

SUITABILITY OF THE SCHEME
NSC is best suited for people who are risk averse and are looking for an option which is safe and saves taxes as well. This scheme also earns a regular and steady income. Since it is a low-risk scheme, it offers 100% capital protection and guaranteed returns. The only drawback with NSC is that it does not offer exponential returns like Mutual Funds (Which have a tax saving option as well like in ELSS) or National Pension Scheme. The interest rate for every quarter is fixed by the government.
The biggest advantage with NSC apart from the security factor is that it has easy access. It being available at all post offices has an outreach to distant investors as well.

ELIGIBILITY FOR INVESTING IN NSC
This is an individual savings scheme; hence the following are eligible to opt for NSC;
1. All residents of India
2. Karta of HUFs (Hindu Undivided Family) in his/her name only

Who cannot invest in NSC?
1. Non-resident Indians
2. Trusts
3. HUFs
Note: In the case of subscribers who opted for the scheme at a given time and then before maturity of the scheme move abroad or become NRI, the scheme will be held till maturity.

IMPORTANT FEATURES AND BENEFITS OF NSC
1. Guaranteed returns
The scheme comes with an annual rate of interest of 7.6% (currently 8%) offering guaranteed returns and fixed income.

2. Variants
Originally there were two variants of NSC offered by the government; NSC VIII and NSC IX which were the 5-year and 10-year plans respectively. In December 2015, the NSC IX was discontinued leaving NSC VIII as the only option available.

3. Tax saving
NSC allows tax savings on investments up to Rs. 1.5 lakh under the section 80C of IT Act.

4. Bare minimum investment
You can start small with NSC as low as Rs. 100 or multiples to be the initial investment. This investment amount can be increased as and when appropriate.

5. Rate of interest
The government keeps revising the ROI every quarter which currently is 8%. It offers an annual rate of interest of 7.6% approximately.

6. Accessibility
It is quite easy to invest in the NSC by visiting any Post Office. All you need to do is submit the desired documents and be KYC compliant.

7. Loan security
NSC is accepted as a security document by Banks and NBFCs while applying for loans. A transfer stamp to be put by the postmaster is required in order to transfer the account to the bank.

8. Nomination
Any family member including the minors can be nominated for against the scheme.

9. Withdrawal scheme
NSC can only be withdrawn upon maturity. No premature withdrawals are allowed except for in cases of emergency like death or critical illness (with court’s order)

10. Maturity amount
Upon maturity, the full corpus is handed-over to the investor. No TDS is deducted in case of NSC. Hence the onus lies on the subscriber to pay tax as applicable.

TAX BENEFIT
NSC comes with a tax benefit on investment up to Rs. 1.5 Lakhs under the Income Tax Act’s Section 80C. Second year onward, tax rebate can be claimed on the interest earned in the first year. This is so because the interest is compounded annually and added back to the initial investment.

DOCUMENTS REQUIRED
1. NSC application form duly filled
2. POI (Proof of Identity)
3. POA (Proof of Address)
4. Photograph
5. Investment deposit- cash or cheque

NSC COMPARED TO OTHER TAX-SAVING SCHEMES
Here is a comparison of NSC with other tax-savings investment schemes in the market;
1. NSC
 ROI: 8.0%
 Tenure: 5 years
 Risk level: low

2. PPF
 ROI: 8.0%
 Tenure: 15 years
 Risk level: low

3. ELSS funds
 ROI: 12-15%
 Tenure: 3 years
 Risk level: market related risk

4. FD
 ROI: 7-9%
 Tenure: 5 years
 Risk level: low

5. NPS
 ROI: 8-10%
 Tenure: till retirement
 Risk level: market related risk

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