National Savings Certificates

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

What is National Savings Certificates?

The National Savings Certificate (NSC) is a popular and safe small-savings instrument that combines tax savings with guaranteed returns. This scheme is backed by the government and is available at post offices. The distribution reach of India Post has added to the popularity of this scheme and it is much sought after across all investing classes.

Why do we need National Savings Certificates?
Maintain Living Standards

Capital Protection

The capital in the NSC is completely protected as the scheme is backed by the Government of India.

Low on Price

Inflation protection

The NSC is not inflation protected. This means whenever inflation is above the current guaranteed interest rate, the deposit earns no real returns. However, when the inflation rate is below the guaranteed interest rate, it does manage a positive real rate of return.

Rider Benefits

Guarantees

The interest rate on the NSC is guaranteed. Currently, the interest rate on NSC is 8.1 per cent on the five-year option, compounded half yearly.

Tax Benefits

Liquidity

The NSC is liquid, despite the stipulated lock-in. Liquidity is offered in the form of loans.

Types of NSC Certificates:

• NSC Issue VIII: With NSC Issue VIII, the aim was to provide an investment avenue for those people who were looking for a way to invest in safe instruments and avail tax benefits at the same time. The certificates issued under this version are available to everyone except an HUF and a trust. These certificates come in denominations ranging from Rs. 100 to Rs. 10,000 but have an interest rate that is slightly lower than the once offered for Issue IX. Another key feature of these certificates is that they come with a maturity period of 5 years.

• NSC Issue IX: The Issue IX certificates also come in denominations ranging from Rs. 100 to Rs. 10,000 and comes with an interest that is slightly higher than that which is offered for Issue VIII. These certificates come with a maturity period that can be as long as 10 years. As is the case with Issue VIII, these certificates also comes with no limit on the amount that can be invested in them but there is a limit on the minimum investment, which is Rs. 100.

Document Required for the Purchase of NSC:
The documents required when purchasing a fresh set of National Savings Certificates will be:

• The application form for the investment. This is called Form 1 and allows you to declare the investment amount and the nominees.

• Other supporting document may also be asked for and these could include:

• Proof of Identity

• Proof of Address

Types of holding for NSC:

Single Holder Type Certificate

As the name suggests, such a certificate is issued to an individual and can be held only by one person. He or she can, of course, appoint nominees for the certificates but they will be the only ones taking decisions about them. This certificate can be provided for an adult or to an adult on behalf of a minor.

Joint ‘A’ Type Certificate

The Join ‘A’ Type certificate is one which is issue to two adult holders and is payable to both when the certificates mature. It can be operates by either of the holders and both the holders signature will be needed in case it is to be transferred or cancelled, or even if the nomination needs to be changed.

Joint ‘B’ Type Certificate

This certificate is the same as the A type joint certificate in that, it too can be issued to two adults who can hold and operate the certificates. The only way that it differs from the previous certificates is in the payment of the maturity value. Unlike the A type joint certificate, this one pays the maturity value to any one of the two holders.

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