National Saving Certificates (NSC) – A Complete guide

National Saving Certificates – A Complete guideNational Saving Certificates – A Complete guide

National Saving certificate is issued by Post Offices in India and is a very good small saving scheme. Do you know that investment in NSC can be created in such a way that it provides regular fixed income and can be used as one of the retirement planning options?

In this article we would discuss complete details about National Saving Certificate, how this is used for reducing tax, how the interest income is taxed and how to use this to create regular monthly income.

Features of National Saving Certificate (NSC)

National Saving Certificate is issued by Post offices and is backed up by the Govt. of India.

  • NSC’s are available for 5 and 10 years period
  • NSC’s are available for a minimum investment of Rs 500 and in multiples of Rs 500 / Rs 1,000 / Rs 5,000 / Rs 10,000
  • There is no maximum limit
  • Interest rates are 8.5% p.a. for 5 year NSC (VIII) and 8.8% p.a. for 10 years NSC (IX)
  • Rs 100 invested in 5 year NSC would fetch Rs 151.62 and in 10 year would fetch Rs 234.35
  • Interest is compounded every half year
  • Nomination facility available
  • Individuals, Joint individuals and minor supported by guardian can invest NSC.
  • Societies / Companies cannot invest in NSC. However NRI's can invest in NSC.
  • NSC's can be purchased at post offices by filling up the application form along with ID proof.
  • NSC's are not available online

How NSC’s are useful?

National Saving certificates are purchased mainly for tax saving purpose. Investment up to Rs 1 lakhs can be claimed under 80C for income tax purpose.

NSC’s provide assured returns. Currently the interest rates are 8.5% p.a. for 5 years NSC and 8.8% p.a. for 10 year NSC

Also read: Is Post office term deposit is better than Bank FD?

Liquidity and premature withdrawal

From liquidity point of view, these can be pledged with banks for loan purpose. Premature withdrawal is not permitted.

Taxability

Investment in NSC up to Rs 1 lakh is exempted from income tax under section 80C.

The interest income on NSC is assumed to be re-invested. From taxability point of view, this needs to be added under “Other income” and the same can be claimed as exemption under section 80C. In case, any individual has already exhausted Rs 1 lakh exemption under 80C, it becomes taxable income.

Any interest amount not taxed (accrual basis) every year becomes taxable at maturity. Means the interest income at maturity is NOT tax free.

Maturity

There is no TDS deducted by post office on interest income. It should be declared by individual as taxable income either every year or during maturity.

If NSC’s are not withdrawn, it would be eligible for interest at prevailing post office savings scheme (which is currently 4% p.a.) for a maximum period of 2 years.

You can transfer NSC from one post office to another post office before maturity by submitting an application form.

Also read: All about Small saving schemes / Post office saving schemes

How to buy NSC Online?

There are questions asked by our readers earlier on various comments, saying can we buy NSC Online? Currently Post office is not offering NSC Online. But if this enabled by Post office, it would be really good that one can straight away buy NSC online as this is safe investment.

Creating regular income from NSC’s for retirement

No wonder this investment option can be used for even retirement planning or to get regular fixed amounts.

Invest in NSC (NSC-IX-10 years) every year for 10 years.  After 10 years, you would get regular assured amounts for subsequent 10 years. Since the capital and returns are protected and backed up by Govt. of India, this can be used as a best retirement planning option.

Year of investment Amt invested (Rs) Maturity date Maturity (Rs)
2013 1,00,000 2023 2,34,350
2014 1,00,000 2024 2,34,350
2015 1,00,000 2025 2,34,350
2016 1,00,000 2026 2,34,350
2017 1,00,000 2027 2,34,350
2018 1,00,000 2028 2,34,350
2019 1,00,000 2029 2,34,350
2020 1,00,000 2030 2,34,350
2021 1,00,000 2031 2,34,350
2022 1,00,000 2032 2,34,350

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Suresh
National Saving Certificates

Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.

136 Comments

  1. RC says:

    Dear Sir

    My wife used to purchase NSC when she used to work in India. After leaving India, she lost complete track of them as the papers were with her mother. We suspect that they have been cashed out on maturity. However, we are not able to discern the amounts of the NSC that were cashed out. Is there any way to track the old NSC numbers and check how many NSC were cashed out and when. My wife has a valid PAN card.

    Thanks

    • Suresh KP says:

      Hi RC, Unfortunately, these are not tracked based on any account no or PAN no. The holder of the NSC has to counter sign before cash / cheque is issued to the NSC holder, hence there should be very less chances of someone getting encashed. 

  2. sanjeev Rastogi says:

    Withdrawal of nsc is very difficult in post office. My permanent address is in hardoi up and now I am living in other city and I want to recive my nsc withdrawal payment in my bank account automatically or on my request but post office team is not giving chegue or transfer in bank without my present.
    How can it is passable.

    • Vijju Iyer says:

      Hello all,

      I read all your comments about pre maturity for NSC bonds. MIS is something that we can able to do the pre maturity after 1 year, but not the NSC bonds.

      1. For MIS ————> We can pre mature the bond, but we cannot get bonus out of our investment.
      2. For NSC————> We can’t do the pre maturity, but pledging can possible in the nationalised bank and the interest rate is high.
      3. Post office cannot do the money transfer to any bank after maturity. We have to deposit our check once we get it from post office after maturity.

      Even I’m in need of doing prematurity for all my NSC savings bonds at this point, but not too sure about it. Please double check all my above comments once again with the post office people from your end. If any changes, please keep me updated here and will check it out later onwards.

  3. Manpreet kaur says:

    Sir,
    I lost my NSC certificates ,I have FIR lodges in concern police station. I request that lady with whom I did that NSC to get their number but she is not refusing but continously making excuses. How can I get their numbers I have date when taken them .Please help me.

  4. Majid says:

    Hi

    I have booked NSC 5 yrs before and it is going to get matured in 2 months.

    meanwhile I have changed my address and I don't have any address proof belonging to my old address.

    What should I do ?

    — Should I simply ask them to update the new address as I have my aadhar/pp with my new address ?

    — Do they need address proof of my old addres ?

    Please advise

     

    Regards

     

  5. Varinder says:

    Hi,

    If i can purchase NSC by providing account number of my nominee ( may be parents) as tax will be saved from my salary and ammount will be added in nominees's account ?

    Thanks.

  6. jitendra says:

    Its bery difficult to redeem NSC purchased from post office in different city..in my case , i have bought NSC worth 40K in 2008 from secunderabad and when they mature this year in feb, i sent it to bank to redeemp it.but Secunderabad post office rejected saying, this can be done only in case of loan (tool almost 2 month to get this reply), then again i sent my NSC through BHOPAL HPO new market , and same after more then 2 month got a written reply that they are now CBS branch so i have to personally visit secunderabad to get the money..its really tiring. but i have not choice left..i m planning to go secunderabad for one day…hopefuly in that one day..i will get money..

  7. Rajesh sharma says:

    Sir, my father had purchased NSC from Chandigarh PO, for 6 years duration, it got matured on July this year, but he expired on june. I am nominee for that nsc. But I live in Shimla, can I encash it at Shimla with my id proofs. Thanks

  8. kiran says:

    Hi suresh. When I pay by cheque for purchading nsc do i have to sign back of chq also? I want to invest but am out of country. Would really appreciate your response

  9. K RAGHAVENDRA says:

    Dear sir,

    Iam a Govt. employee, my salary is Rs 320000/- p.a, my savings under 80C is Rs 1 lakh, i get Rs 50000/- p.a as interest from Rs 5 lakh fixed deposit in bank, ' does iam eligible for submitting Form 15G to bank, as my taxable limit crosses Rs 2 lakhs'

    Kindly reply me, sir

    Thank u

  10. anitashan says:

    I purchased NSC bond for 10000 in 2007 and completely forgot about it. It got matured last July and saw few weeks back. Will I still be able to get the amount from the post office ? Do have any idea on what all would they need apart from my id proof and the original certificate?

     

    Thanks

    Anita

    • Suresh KP says:

      Anitashan, You can encash now. Just carry NSC certificate, thats all

      • nitin says:

        Hi sir,
        i purchased nsc in 2004 june in dehi.now im in dehradun.
        Im unable to locate my nsc papers.
        also nsc has matured,
        how can i withdraw my nsc.
        Kindly help.
        can i call any no.
        regards
        nitin bhatia 9719234558

  11. Pradhan says:

    Dear Sir
    Greetings.

    Recently the PWD department returned the National Savings Certificate deposited as a 'fixed security deposit' by my great grandfather in the year 1970.
    According to the information available on the certificate it says it is a 7-Year National Savings Certificate Fourth Issue. 

    The Saving bond is of Rupess thirteen hundred.

    Sir, I am completely absurd about the the terms and conditions included,:  
    Is the certificate renewable to the present Scheme of 9th Issue?
    If so, then what will be valuation of the certificate after Forty Four years?
    Notwithstanidn it crossed 5,6,7 and 8 Issues. 

    Sir, we don't have papers of the terms and conditions, if there was, when my grandfather deposited the bond. 
    The post master is not able to reply my queries if the valuation of the certificate exists.

    regard
    Pradhan
    Darjeeling
     

  12. nirmala says:

    when i purched my nsc in aug. 2014 that will be count wicth financial year!

  13. Hitesh says:

    Dear Sureshji,

    I had carried the NSC document for encashing to my hometown & returned to my workplace. Latter I understood that the NSC certificate has gone missing since I was not able to give it to my brother. It has already matured a year back. How can I ask for a claim?

    Hitesh

     

  14. shree says:

    Hi Suresh,

    I have purchased NSC at NH postoffice at chennai.My certificates are matured and i am not able to go in person to encash it and i authorised my mother to collect it.But postmaster refused to pay stating that my signature difference is there.What should be done now.I cannot go in person for atleast five years.

  15. Srinivas Rao says:

    I have NSC for Rs. 100000.00 ( One lakh only) . Can i withdraw after two year form the dtae of commencement i.e. 12.01.2012

  16. makarand mhatre says:

    i have purchased NSC from vasai(thane).Now after maturity can i encash it in mumbai post officces ????

  17. K RAGHAVENDRA says:

    Dear Sir,

    I would like to purchase NSC VIII certificates of Rs 10000/- , total worth of Rs 500000/-,  '' is the interest obtained on nsc bonds taxable or not ''.  For bank, as per bank terms and conditions, if a customer exceeds interest on fixed deposits of Rs 10000/- per anum in his CIF (Customer Information Facility), he is liable to tax,

    In case of nsc, how would be the tax deduction, kindly reply me

    Thank u sir

     

    • Suresh KP says:

      Interest on NSC is taxable and you need to indicate the same in your ITR and pay income tax. However you can show such interest in 80C and get exemption in case you have not exhausted 80C limit.

  18. Rashmi says:

    Hi, 

    I purchased NSC 5 yrs from post officefor the amount of Rs 10000  during nov 2013 and i had declared it for tax purposes in dec 2013 

    1: will this be declared for the 13-14 tax year.

    2: can i declare the same for the 2014-15 as well since its a 5 year NSC.

     

    Thanks

    • Suresh KP says:

      Hi Rashmi, I hope the question is about 80C deduction. You would get exemption in the financial year when you invested. This transaction is done in Nov-13, hence 2013-14, you would get exemption. You cannot get same exemption in 2014-15.

  19. Walter says:

    Dear Suresh,

    I had purchased an NSC 6 years back in Hyderabad, AP. I am currently staying in Mangalore, Karantaka. I have applied for transfer of NSC from Hyderabad to Managlore, but there is no response from Hyderabad PO even after repeated requests from the head post office in Mangalore, for the past 6 months . My NSC has matured and I cannot travel to Hyderabad to collect it. I still have the original certificate with me but I am afraid that someone has misappropriated my money in Hyderabad, hence the delay. Kindly advise.

    • Suresh KP says:

      Hi Walter, Please file complaint in Post office URL http://ccc.cept.gov.in/PCData.aspx Please select NSC and give all relevant details. This should be addressed within 1 week

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