National Saving Certificate (NSC) | How to buy NSC

National Saving Certificate is an Indian Government saving bond, popularly known as NSC. It is primarily used for small savings and income tax saving investments in India. It is part of the postal saving system of Indian Postal Services (India Post). 

NSC can be purchased from any Post Office in India by an adult (either in his/her own name or on behalf of a minor) and two adults jointly. You can pledge these to banks as collateral for availing loans. 

The holder gets the tax benefit under Section 80C of Income Tax Act, 1961. In this post, let’s take a look at how to buy National Saving Certificate.

Document required for purchasing NSC 

Following documents required for purchasing 5 years National Saving Certificate

1. The application form for the investment

2. Proof of identity

3. Proof of address

4. Copy of PAN card

5. Two passport size photographs

Who can purchase these certificates?

These certificate can be purchased by the following

1. A single adult

2. Joint Account by maximum 3 adults.

3. A minor above 10 years of age.

4. An adult can also but it on behalf of a minor.

5. A guardian can purchase it on behalf of a person of unsound mind.

How to buy National Saving Certificate?

Buying NSC is a very simple process. You can buy it from any post office. You will have to submit some documents as mentioned above. To buy it you have to fill an application form which you will get from the post office itself. 

Fill this application form and submit it along with the required documents. Make the payment for the amount you want to invest. This payment can be made in cash or via cheques, pay order or demand draft drawn in favour postmaster. 

After the verification, the postmaster will give you the NSC printed or entered manually in a pass book. If payment is made via a cheque then the certificate will only be issued upon the realization of the payment made.

Minimum and Maximum Investment

You have to invest a minimum amount of Rs 100 in the NSC scheme. There is no such limit for maximum investment. However, the tax deduction can be claimed of maximum amount of Rs 1.5 lakh invested in a single financial year.

Also read: 7 Investments for Tax Free Income in India

Benefits of National Saving Certificate 

1. It is a risk free investment as it is a government scheme.

2. This scheme is specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.

3. No maximum limit for investment.

4. No Tax deduction at source.

5. Certificates can be kept as collateral security to get loan from banks.

6. The rate of interest is also high as compare to current fixed deposit rates of various banks.

7. It can be purchased anywhere in India from a post office and can be transferred to another post office.

8. Nomination facility is available in this scheme. In case of death, the nominee shall be entitled for the maturity amount.

9. The rate of interest does not change, it remain fixed over the life of the scheme.

10. Maturity value of a certificate of INR.1000/- purchased on or after 01.04.2020 shall be INR. 1389.49 after 5 years.
11. It is issued in the form of Passbook w.e.f. 01.07.2016.

Tax Benefit on NSC 

You can avail a tax deduction of Rs 1.5 lakh for investment in NSC under Section 80C of Income Tax Act. The interest accrued every year on NSC also qualifies for tax exemption u/s 80C.

Nomination in NSC 

You can also nominate anyone in your NSC. Nomination can be done at the time of purchasing the scheme in application form or at any time before the redemption. 

You can also change nomination at any time before the redemption. The person so nominated shall be entitled to claim the maturity value in case the certificate holder dies before the maturity date.

Transfer of National Saving Certificate 

NSC can be transferred from one person to another. However, the transfer is allowed only once.

Interest on NSC in Income Tax Returns (ITR)

To avail the tax benefit on accrued interest, it is important to declare the same every year in your income tax return (ITR) form under the head “Income from Other Sources”.

Also read: Public Provident Fund (PPF) | A popular saving scheme

Also read: What is NPS (National Pension System)?

Also read: Post Office Recurring Deposit Account (RD Account)

Also read: Post office monthly income scheme (MIS)

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National Saving Certificate (NSC) | How to buy NSC