Home > Investment > NSC – National Saving Certificate

NSC – National Saving Certificate

National Saving Certificate, commonly known as NSC, is saving bonds issued by Indian Government to individuals only. It is primarily focused on small savings. Also, the amount invested in NSC, can be claimed as tax deduction investment u/s 80C of Income Tax Act, 1961 subject to limit specified.

Features of NSC VIII Issue:-

  1. Certificate are issued at Par.
  2. Minimum investment is of Rs 100. Available denomination are Rs 100, Rs 500, Rs 1,000 & Rs 10,000.
  3. Amount invested in NSC can be claimed as investment u/s 80C. Also the accrued interest on NSC will qualify for investment u/s 80C.
  4. There is no maximum limit of investment.
  5. Maturity period is of 5 years.
  6. Interest rate of 8.50% compounded semi-annually.
  7. No tax deduction as source (TDS).
  8. Only individuals are allowed to purchase investment. Trust, HUF etc are not allowed to make investment.
  9. Premature withdrawal is allowed only in special cases i.e.
    a) on the death of the holder or any of the holders in the case of joint holders
    b) on forfeiture by a pledgee being a Gazetted Government Officer when the pledge is in conformity with these rules
    c) when ordered by a court of law
  10. NSC can be pledge as collateral security for getting loan from bank.
  11. Value of investment with accrued interest on a certificate of Rs 100 denomination.
    Year Accrued Interest Total Value
    1 8.68 108.68
    2 9.43 118.11
    3 10.25 128.36
    4 11.14 139.50
    5 12.11 151.62
    Total 51.62
  12. Only principal amount is repaid if the certificate is encashed within one year from the date of deposit. If the encashment is done after expiry of one year but before the expiry of 3 year from the date of deposit then simple interest is payable only for the complete month at the rate applicable from time to time to single accounts under Post Office Saving Account Rules, 1981. The following table represent the amount receivable after 3 years on premature withdrawal of a certificate of Rs 100 denomination
    Period from date of deposit Amount Receivable
    Three years or more but less than three years and six months 124.24
    Three years and six months or more but less than four years 128.81
    Four  year or more but less than four  years and six months 133.56
    Four years and six month or more but less than five years 138.48

    Complete details regarding NSC VIII can be downloaded from below:-
    NATIONAL SAVINGS CERTIFICATES (VIII-ISSUE) RULES, 1989
    NATIONAL SAVINGS CERTIFICATES (VIII-ISSUE) AMENDMENT RULES 2013

Features of NSC IX Issue:-

    1. Certificate are issued at Par.
    2. Minimum investment is of Rs 100. Available denomination are Rs 100, Rs 500, Rs 1,000 & Rs 10,000.
    3. Amount invested in NSC can be claimed as investment u/s 80C. Also the accrued interest on NSC will qualify for investment u/s 80C.
    4. There is no maximum limit of investment.
    5. Maturity period is of 10 years.
    6. Interest rate of 8.80% compounded semi-annually.
    7. No tax deduction as source (TDS).
    8. Only individuals are allowed to purchase investment. Trust, HUF etc are not allowed to make investment.
    9. Premature withdrawal is allowed only in special cases i.e.
      a) on the death of the holder or any of the holders in the case of joint holders
      b) on forfeiture by a pledgee being a Gazetted Government Officer when the pledge is in conformity with these rules
      c) when ordered by a court of law
    10. NSC can be pledge as collateral security for getting loan from bank.
    11. Value of investment with accrued interest on a certificate of Rs 100 denomination.
      Year Accrued Interest Total Value
      1 8.89 108.89
      2 9.68 118.57
      3 10.54 129.11
      4 11.48 140.59
      5 12.50 153.09
      6 13.61 166.70
      7 14.82 181.52
      8 16.13 197.65
      9 17.57 215.22
      10 19.13 234.35
      Total 134.35
    12. Only principal amount is repaid if the certificate is encashed within one year from the date of deposit. If the encashment is done after expiry of one year but before the expiry of 3 year from the date of deposit then simple interest is payable only for the complete month at the rate applicable from time to time to single accounts under Post Office Saving Account Rules, 1981. The following table represent the amount receivable after 3 years on premature withdrawal of a certificate of Rs 100 denomination
      Period from date of deposit Amount Receivable
      Three years or more but less than three years and six months 123.14
      Three years and six months or more but less than four years 127.49
      Four  year or more but less than four  years and six months 131.99
      Four years and six month or more but less than five years 136.65
      Five years or more but less than five years and six months 143.81
      Five years and six month or more but less than six years 149.31
      Six years or more but less than six years and six months 154.65
      Six years and six month or more but less than seven years 160.37
      Seven years or more but less than seven years and six months 166.30
      Seven years and six month or more but less than eight years 172.46
      Eight years or more but less than eight years and six months 178.84
      Eight years and six month or more but less than nine years 185.46
      Nine years or more but less than nine years and six months 192.32
      Nine years and six month or more but less than ten years 199.43

      Complete details regarding NSC IX can be downloaded from below:-
      NATIONAL SAVINGS CERTIFICATES (IX-ISSUE) RULES 2011

About Rohit Pithisaria

I am a Chartered Accountant based in Jaipur. I do have interest in Income Tax and managing the income tax related section on TaxAdda. You can email me on info@taxadda.com for your queries related to income tax.

Check Also

mistakes of new investors

5 Common Mistake of Newbie Investors

The common man is not an experienced and professional investor. They make investments sparingly hoping …

close-link
Subscribe to our Newsletter for weekly updates
GST, Income Tax, Finance and more
Give it a try, you can unsubscribe anytime.
close-link
close-link
Remain Updated with GST & Income Tax
Join 20K subscribers