National Savings Certificate (VIII-Issue) Scheme: Application, Benefits, And More

The NSC is a fixed-income government investment scheme started by the Government of India in 1989. Designed to encourage small to medium-sized investors to invest and also save on taxes up to 1.5 Lakhs. Keep reading to find out more about the National Savings Certificate interest rate, maturity period, who should invest in such govt schemes and other associated details.

Overview

NSC Key Information At A Glance
Interest Rate	7.7% per annum
Lock In Period	5 Years
Minimum Investment	₹1000 and then multiple of ₹100 after that
Maximum Investment Limit	No Maximum Limit
Risk Profile	Low-Risk
Tax Benefit	Deductible in a Financial Year Up to ₹1.5 lakh as per Section 80C limit

What is the National Savings Certificates (VIII-Issue) Scheme?

Launched by the Department of Economic Affairs, Ministry of Finance, Government of India, the NSC or National Savings Certificate is a savings scheme or simply put, a government-backed savings bond used to encourage savings amongst small to medium-sized retail investors whilst also saving on taxes under Section 80C of the Income Tax Act of 1961.

Read more: 20 Easy Ways to Save Income Tax in 2024

NSC Scheme Features

It is important to know the various features that make the NSC scheme unique and beneficial to investors for them to make the correct investment decisions for themselves.

• Interest Rates: A fixed annual interest rate can be earned through these, guaranteeing the investor a regular income. The interest rates are adjusted quarterly by the government.

• Tax Savings: The principal amount invested in NSC is eligible for tax deductions under Section 80C up to 1.5 Lakhs annually.

• Investment Maturity: The National Savings Certificate VII- Issue scheme maturity tenure is for 5 years after which the principal amount and the accrued interest are returned to the investor.

• Flexibility of Investment: After an initial minimum investment of ₹1000, investments can be as low as ₹100 for the rest of the term.

• Risk Profile: As these are government-backed savings bonds, the risk is very low in this type of investment scheme as it is not linked directly to the market.

• Accessibility: This govt scheme is available through any nearby Post Offices upon submitting the required documents and undergoing the KYC verification process. The bond is easily transferable from one Post Office to another and from one individual to another without hurting the interest accrual, or lock-in period.

• Nominations: The investor is free to nominate anyone like family members or even a minor to receive the matured funds, in case of an untimely demise of the original investor during the lock-in period.

• Loans against NSC: The investor can use NSC as security or collateral whilst applying for loans from the banks. It is important to note that the concerned Post Master must authorise the transfer of said bond to the bank.

NSC Scheme Benefits

There are multiple boons by the NSC for small to medium-sized investors as it is uniquely framed to help create a culture of financial responsibility and stability in the family.

• Ease of Investment: The government scheme is wisely available through Post Offices and the process is smooth and hassle-free making it great for the general public.

• Tax-Free Accrual: The interest earned is tax-free with these savings bonds, except the one earned in the final year.

• Investment Continuity: Even after the maturity of the term, you can continue to invest in that particular scheme.

• Risk Aversion: When compared to market-linked investments, NSC is very safe and risk-averse and is backed by the Government.

• Compounding Advantage: The interest that is earned by the scheme annually is reinvested into the same. This increases the amount invested every year without having to purchase additional bonds.

• Transfer of Ownership: Transfer of the ownership of the bond is allowed once within the lock-in period.

Read More: Post Office Monthly Income Scheme

NSC Scheme Tax Benefits

Subscribing to the NSC scheme gives multiple benefits for tax planning and savings on taxes. Some key Tax Benefits are as follows:

• The investments made under the National Savings Certificate VIII Issue scheme are limited to under 1.5 Lakhs till which amount is tax deductible under Section 80C of the Income Tax Act (1961). It should be noted that there is no limit to how much there can be invested in the NSC.

• The interest rates are currently at 7.7% per annum but are adjusted quarterly by the government.

• The interest that is earned by the scheme annually is reinvested into the same. This increases the amount invested every year without having to purchase additional bonds.

• You can calculate your savings using the National Savings Certificate calculator.

Types Of NSC VII Scheme

The NSC has been structured into three types based on who holds ownership and who receives the funds upon maturity. The three types of NSC are:

• Single Holder Type Certificate: These are issued to a single person only although they can nominate a person. The decision-making power rests with the single person only. A person can also be given power as guardian of an NSC owned by a minor.

• Joint ‘A’ Type Certificate: This type of certificate is issued to two adults. The amount payable is owned to and shared equally by both holders and decisions regarding appointing a nominee, transfer or cancellation require both sets of signatures.

• Joint ‘B’ Type Certificate: This is the same as the one before except for one difference. The amount payable at the end is given to only one of the holders. Nomination and other powers remain the same as Type ‘A’.

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Maturity Amount And Deposit

The various details regarding National Savings Certificate viii issue scheme maturity amount and deposit details are as follows:

• After an initial minimum deposit of ₹1000, any amount in multiple of ₹100 can be deposited for the rest of the period.

• There is no limit to the amount that can be deposited by the holder. The account holder is free to increase or decrease the amount at his/her convenience.

• An individual is free to open any number of accounts.

• The deposit is matured after 5 years from the date of deposit and will be repaid to the account holder after the required forms are submitted.

• An annual accrual of Interest Certificate can be issued to the holder upon request by the accounts office at the Post Office.

• In the calculation of maturity value, any amount less than a rupee shall be rounded off. Any amount more than 50 paise shall be rounded up to the nearest rupee and any amount less than 50 paise will be ignored.

• The interest rates are currently at 7.7% per annum but are adjusted quarterly by the government.

National Savings Certificates (VIII-Issue) Scheme Historic Data

NSC- Historic Interest Rate Data
Year	April-June	July-Sep	Oct-Dec	Jan-Mar
2024-2025	7.7	7.7
2023- 2024	7.7	7.7	7.7	7.7
2022 - 2023	6.8	6.8	6.8	7
2021- 2022	6.8	6.8	6.8	6.8
2020- 2021	6.8	6.8	6.8	6.8
2019 - 2020	8	7.9	7.9	7.9
2018 - 2019	7.6	7.6	8	8
2017- 2018	7.9	7.8	7.8	7.6
2016 - 2017	8.1	8.1	8	8

NSC Scheme Eligibility Criteria

Although NSC is for any individuals looking for a safe, low-risk investment instrument, there are certain stipulations as to who all can apply.

• Applicant must be a resident of India. NRI (Non-Residential Indians) cannot apply for this government scheme.

• People of any age can apply. If a minor (minimum age 10 years) is applying then an adult can issue on their behalf. The adult must be the legal guardian of the minor.

• Applicant must possess Identity and Residential proof documents like an Aadhaar Card, PAN Card and any other documents that are required by the post office/bank.

• The govt scheme is only available to individuals therefore Trusts and Hindu Undivided Families (HUFs) are restricted from applying.

Benefits Of NSC vs Other Schemes

Scheme	Returns (p.a)	Lock-in Term	Risk Level
National Savings Certificate	7.70%	5 years	Low
Equity-Linked Savings Scheme	Market-linked.	3 years	Medium High
Public Provident Fund	7.10%	15 years	Low
Sukanya Samriddhi Yojana	8%	21 years	Low
Senior Citizen Savings Scheme	8.20%	5 years	Low
Unit Link Insurance Plan	Market-Linked	5 years	Medium High
National Pension Scheme	Market-Linked	Till retirement (60 years extendable to 70 years)	Medium High
Fixed Deposits	7% - 7.5%	5 years	Low

Who Should Apply For The Govt Scheme?

NSC has unique features and parameters that make it suitable for certain types of investors. The main factors to consider before investing in NSC would be:

• It is a safe and secure way for small and medium retail investors to invest their money. Those investors who value stability and guaranteed income and encouraged to invest here.

• NSC returns are unable to beat inflation therefore, it is wise to invest as a way to increase tax-deductible income under Section 80C of the Income Tax Act.

• It is best viewed as a government-backed saving scheme as it provides total capital protection and can provide steady returns.

NSC Scheme Application Process

Applying for the National Savings Certificate is very easy as it is very accessible and only requires a few simple steps on the part of the applicant: The process is as follows:

Step 1: The applicant must find the nearest post office or a designated bank.
Step 2: Acquire the application form or download it from the official website.
Step 3: Fill out the application form and attach all relevant documents.
Step 4: Fill out necessary forms like declarations and nomination details.
Step 5: Submit the application form at the nearest Post Office/ designated bank.
Step 6: Applicants must also have a minimum initial deposit of at least ₹1000.
Step 7: Once the application is processed, an acknowledgement receipt will be provided.
Step 8: The NSC account is now open.

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NSC Scheme Documents Required

The application process requires the submission of certain required documents for the application to be processed and catalogued for the right applicant. The required documents are

• Recent passport-size photograph
• Identity proof documentation like Aadhaar Card or PAN Card.
• Proof of age i.e. Birth Certificate
• NSC Application Form duly filled.

The following documents can be used as identity and address proof:

• Voter’s ID Card
• Passport
• Driving License
• A letter from the National Population Register containing name and address.
• NREGA Job Card signed by the State Government Officer.

Request For Duplicate Of National Savings Certificate

A request for a duplicate of your NSC can be made if the original is lost, stolen or mutilated. The Steps involved in acquiring a new copy are:

One must fill out the Duplicate Savings Certificate form and submit it to the post office from where they got their original NSC issued. The following key fields need to be filled:

• NSC Identifying information like Serial number, NSC Issue number and denominations.

• Date of purchase of the Certificates.

• Reason for applying for a duplicate certificate along with supporting information.

Nomination Process And Its Benefits

The nomination process is not mandatory in the NSC application process but it is highly recommended. In the case of any untimely death of the certificate holder, the nominee will receive the amount once the lock-in period is over. In the case of a minor, it’ll go to the legal guardian. Before nominating someone you should keep in mind that:

• The nomination process can be done through the initial application process, a subsequent nomination form or a nominee change form as well.

• Nomination or change in it needs to be done from the bank/post office from where the certificate was issued.

• In case of no one being nominated the funds will be transferred to their legal heir.

• For offline application mode, if the certificates have been issued on different dates and from different post offices, then a separate nomination form will have to be filed.

• Filing a nominee has multiple benefits that include but are not limited to the proper transfer of funds, and withdrawal of up to 50% of the amount at a given time if the benefactor is a girl child, once she turns 18, for her marriage.

Terminating/Withdrawing NSC Before Maturity Period

Except in certain circumstances, NSC investments have a five-year lock-in term and are not subject to early withdrawals:

• The certificate holder either dies or forfeits them.

• Early payment of the NSC is mandated by the court.

• In either event, the amount received would be determined by the length of the holding period; only the initial investment would be reimbursed if the NSC was cancelled early within a year after purchase.

• The initial investment plus annual compound interest would be paid if the NSC was ended too soon between years one and three.

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Shifting Or Transferring Of NSC

Shifting NSC from one post office to another.

Form NC-32 must be completed if you have moved from the location where you bought the NSC and would like to transfer it to a different bank or post office. The form would ask for details on the nominee, the certificate's details, and the certificate's holder. You can turn in this form at the new bank/post office or the old one.

Transferring ownership of NSC from one person to another.

The postmaster of the issuing post office must provide formal authorization if you wish to transfer ownership to someone else. Even after this, ownership transfers are only permitted in certain circumstances, namely:

• From the original owner to the legal authority or another individual appointed by the court.

• In the event of the original holder's death, the original holder will transfer to the nominee.

• One holder may transfer ownership to another in a joint holding situation.

To transfer ownership, NC-34 Form Annexure 2, must be completed, and there are a few crucial things you should be careful of:

• First off, ownership cannot be changed until a year after the certificate is sold. It will only receive legal sanction after a year if ownership is transferred before then.

• In the event of joint holding, both holders' signatures are necessary.

• If the NSC is being held on behalf of a juvenile, you will need to demonstrate that the child is alive and well and that transferring ownership is in the child's best interests.

The following is the procedure for transferring ownership:

• To transfer ownership, both the current owner and the new owner must apply.

• After looking into the matter, the bank or post office will give the new owner ownership if there are no problems.

• The prior owner will also no longer be able to use NSC's e-mode following the ownership transfer.

• If the NSC was in passbook mode, the bank or post office would pick up the passbook from the prior owner, remove all of his information, and enter the new owner's information.

• Only authorised officials will perform the previously mentioned actions.

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Conclusion

The National Savings Certificate (NSC) is a savings scheme issued by the government of India that enables small to medium sized retail investors to save and invest their money into a stable but low-yield bond. It has multiple tax benefits and can be beneficial for tax planning. With an easily accessible setup through all Post Offices, the NSC serves as a backbone of Indian fiscal policy for encouraging the culture of saving amongst the masses.

For more information and to engage with a community of informed citizens, visit the Jaagruk Bharat Community Page. Get updates, tips, and insights on how to access other such schemes issued by the government of India

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