Jay Kishan Sharma (Head Article) (249 Points)
01 December 2010What are NSC CERTIFICATES???its merits,demerits,
Is Investment into this is beneficial?From where can i purchase this?what are its selling procedure?is there any restriction in keeping this.
ON A WHOLE, I WANT FULL INFORMATION ABOUT NSC CERTIFICATES.??
Plz guide me??
Devendra
(Chartered Accountant)
(4775 Points)
Replied 01 December 2010
National Savings Certificate, popularly known as NSC is an assured investment scheme. It is a time-tested instrument providing double benefits; one is tax savings and the other is adequate returns with high safety. They facilitate long-term safe saving options for the investor. NSCs are a good investment optionfor salaried class people, businessmen as well as government employees. When you buy a NSC for a particular value, the interest compounded is returned along with the principal amount only after the maturity. It is a cumulative scheme wherein the interest is reinvested. The duration for an NSC is 6 years. Owing to it being time-bound, NSCs have low liquidity.
NSCs are available at all post offices across the country. They are issued by the Department of Post. Many middle class people in the country buy NSCs for saving tax as well as to earn decent return on their investment. Though NSC has much competition from other investment options like shares and mutual funds, yet it is highly popular owing to its respectable returns which are government guaranteed as well as tax-exempt.
Interest and Returns
NSC attracts interest rate of 8% per annum compounded half-yearly. Because of compounding, the effective rate of interest comes to 8.16%. NSCs are under a cumulative scheme and the entire interest earned every year is reinvested. It is paid along with the principal amount only after the maturity of the certificate. For example, if a person invests Rs. 10,000 in NSC today, he will receive Rs. 16,010 after 6 years.
Features of National Savings Certificate
Types of NSCs and Eligibility
Any adult individual can buy NSC for himself or on behalf of a minor. Two adults can jointly buy the certificate. Even a trust can buy NSCs. There are basically 3 types of certificates that can be bought by individuals:
Single Holder Type Certificate: This certificate can be bought by an individual in his name or on behalf of minor, or a trust.
Joint 'A' Type Certificate: this certificate is issued to 2 adults jointly and is payable to both holders jointly or to the survivor.
Joint 'B' Type Certificate: This certificate is issued to 2 adults jointly payable and is payable to either of the holders or to the survivor.
How and Where to Apply
NSCs can be purchased at authorized post offices and all head post offices across the country. A person can apply for an NSC in a prescribed manner at any of the post offices. NSC can be applied for in person or through an agent. Agents for this purpose are active in every nook and corner of the country. NSCs are available in denominations of Rs. 100, Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000. Minimum purchase is for Rs. 100 and there is no maximum limit to the purchase of NSCs. A person can invest as much as his budget allows. Payment for NSCs can be made in cash or by a locally executed cheque or order or through a demand draft in favor of postmaster. A duly signed withdrawal form along with passbook to enable withdrawal from savings account of post office could also be used as a payment mode. Also payment can be made by surrendering a matured old certificate discharged as ”Received payment through issue of fresh certificate vides application attached.”
Encashment
The NSC can be encashed at any registered or authorized post office. The authority needs to be satisfied with the identity of the person presenting the certificate. On receipt of the amount, the receiver signs the back of the certificate as a proof of receipt. The NSCs can also be encashed through banks or by transferring them to the desired post office.
If the certificate is purchased on behalf of a minor, and at the time of maturity the minor has attained the age of adult, then that recent adult needs to sign the certificate. The signature needs to be attested by the person who bought the certificate in his behalf or by the postmaster.
The maturity period of NSC is 6 years. Generally pre-mature encashment is not allowed but in cases like death of the holder, forfeiture by the nominee or court’s order, the NSC can be encashed prematurely.
Tax benefits
Deposits in NSCs up to Rs. 1 lakh can be availed as deduction under Section 80C of the Income Tax Act. The annual interest earned is deemed to be reinvested and thus qualifies for the deduction under Section 80C.
Devendra
(Chartered Accountant)
(4775 Points)
Replied 01 December 2010
Available for purchase/issue at all Post Offices in India.
The minimum amount of investment under NSC is Rs 100/-
Period of maturity of a certificate is six Years.
Certificates are available in denominations (face value) of Rs. 100, Rs.
500, Rs. 1000, Rs. 5000 & Rs. 10,000.
There is no maximum limit for purchase of the certificates.
Premature encashment of the certificate is not permissible except at a
discount in the case of death of the holder(s), forfeiture by a pledgee and
when ordered by a court of law.
Can be encashed/discharged at the post office where it is registered or any other post
office.
Devendra
(Chartered Accountant)
(4775 Points)
Replied 01 December 2010
Regards
Devendra P Kulkarni
bhupendra
(Service)
(22 Points)
Replied 14 March 2011
I have purchased NSC in the name of my daughter and she is minor;
On NSC Certificate it's shown only my daughter name along with her date of birth.
Can i take rebate u/s 80C on it ?
Pankaj Arora
(Learner)
(3134 Points)
Replied 14 March 2011
no you can not take since its on your daughter’s name….
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 14 March 2011
| Originally posted by : bhupendra | ||
 |
I have purchased NSC in the name of my daughter and she is minor; On NSC Certificate it's shown only my daughter name along with her date of birth. Can i take rebate u/s 80C on it ? |
 |
if the money outflow is from your accounts ( cash not considered good) for purchase of such NSC, and signed by yourself as natural guardian, then u can claim 80C benefit, otherwise not.
bhupendra
(Service)
(22 Points)
Replied 14 March 2011
Form for purchase of NSC signed by me, on certificate my photograph pasted along with stamp of post office.
Pankaj Arora
(Learner)
(3134 Points)
Replied 14 March 2011
That means you will signed as guardian otherwise visit post office and ask to them is they place your name as guardian if yes than you could take deduction…
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