National Saving Certificate : A Smart Investment Option With Tax Benefits
6 Oct, 2023
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National Savings Certificate (NSC) is a popular investment scheme offered by the Government of India, aimed at encouraging individuals to save for the future.
NSC is a fixed-income investment that offers favourable rates of interest as well as tax saving advantages under Section 80C of Income Tax Act. This blog will go over the features, benefits, and eligibility conditions of the NSC-VIII Issue.
Account Maturity and Minimum Deposit
The maturity span of the NSC-VIII Issue is 5 years. This implies your money will grow and earn interest over a five-year period. The minimum deposit necessary to start an NSC account is ₹1000, and subsequent deposits can be made in multiples of 100. There is no maximum deposit limit, so investors can contribute according to their financial capacity.
Types of NSC Accounts
There are different types of NSC accounts that can be opened, depending on the number of holders:
- Single Holder Type Account: An adult can create a single holder type account for themselves or on behalf of a minor. A minor can also create a single holder type account when they reach the age of ten.
- Joint 'A' Type Account: This account can be opened by up to three adults, with the maturity amount payable to both holders jointly or to the survivor in case of the demise of one holder.
- Joint 'B' Type Account: Similar to the Joint 'A' Type Account, this account can be opened by up to three adults. However, the maturity amount is payable to either of the survivors in case of the demise of one holder.
Tax Benefits and Interest Deduction
By investing in NSC (National Savings Certificate), individuals can avail of tax deductions under Section 80C of the Income Tax Act, with a maximum limit of ₹1.5 lakhs per financial year. This deduction can effectively lower your taxable income and consequently reduce your tax liability.
Interest Rates
Table 1
The following Table shows the premature closure value of account opened between 12th December 2019 to 31st March [both days inclusive] with 1000 rupees.
| Period from the date of the account to the date of its pre-mature closure | Amount payble inclusive of interest [rupees] |
|---|---|
| [1] | [2] |
| 3 years or more, but less than 3 years and 6 Months | 1221.61 |
| 3 years and 6 months or more, but less than 4 years | 1263.05 |
| 4 years or more, but less than 4 years and 6 months | 1305.90 |
| 4 years and 6 months or more, but less than 5 years | 1350.20 |
Table 2
The following table shows the premature closure value of account opened on or after 1st day of April,2020 with 1000 Rupees.
| Period from the date of the account to the date of its pre-mature closure | Amount payble inclusive of interest [rupees] |
|---|---|
| [1] | [2] |
| 3 years or more, but less than 3 years and 6 Months | 1184.29 |
| 3 years and 6 months or more, but less than 4 years | 1218.15 |
| 4 years or more, but less than 4 years and 6 months | 1252.98 |
| 4 years and 6 months or more, but less than 5 years | 1288.80 |
Loan Facility
One of the advantages of NSC is that it offers a loan facility. In case of a financial emergency, you can pledge your NSC certificate with a bank to avail a loan.
The loan amount is usually a percentage of the face value of the NSC certificate. This feature provides flexibility and liquidity to investors when they need it.
Conclusion
National Savings Certificate-VIII Issue is an appealing investment choice for those wanting to save money for the long term. NSC provides a comprehensive investment solution, with a minimum deposit of ₹1,000, adjustable deposit quantities, several types of accounts, tax benefits, and the possibility of loans.
To understand the precise implications and benefits of NSC depending on your own financial objectives and circumstances, it is best to speak with a financial counsellor or tax specialist.
Remember that investing in NSC not only helps you save for the future, but it also promotes the country's general economic development by channeling cash into government projects. Begin investing in NSC today to safeguard your financial future.
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