National Saving Certificates, or NSCs, as they are more popularly known, are a time-tested tax-saving instrument that combine adequate returns with high safety.

RATE OF RETURN:
9.5 % p.a. compounded 6-monthly, payable on maturity.

TAX CONSIDERATION :
Amount deposited (upto Rs. 60,000) qualifies for tax rebate under section 88.
No TDS from interest.

MODE OF ACCOUNT HOLDING:
The certificates are issued to the individuals and trusts only. The individual includes (a) single adult (b) two adults in joint names (c) an adult, whether parent/guardian or not, on behalf of a minor and (d) to a minor directly.
NSCs can’t be purchased on behalf of a Hindu Undivided Family.
When a certificate is purchased by a person other than parent/guardian on behalf of a minor, the maturity value of the certificate, if due during the minority of the minor, will be paid to the parent/guardian only, instead of the person who purchased the certificate.

MODE OF PAYMENT:
The certificate can be purchased on payment by
a. cash
b. local cheque, pay order or demand draft drawn in favour of the post-master and
c. by presenting a duly-signed withdrawal Form or cheque, together with the pass-book for withdrawal from the post office savings account standing at the credit of the purchase at the same post office.

NOMINATION:
Nomination facility is available in case of NSCs.

INVESTMENT LIMITS:
The certificates can be purchased for any amount. There is no limit on holding.
These certificates are in denominations of Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000.

TENURE:
The maturity period of NSCs is six years.

TRANSFERABILITY:
NSCs can be transferred from one person to another through the post office, on payment of a prescribed fee.

PREMATURE ENCASHMENT:
The certificates can be prematurely encashed in case of
a) Death of the holder or any of the holders in case of joint holders
b) When ordered by a court of law.
If a certificate is encashed within a period of one year from the date of the certificate, only the face value of the certificate shall be payable.

If a certificate is encashed after expiry of one year but before the expiry of three years from the date of certificate, the encashment shall be at a discount. On encashment of the certificate, an amount equivalent to the face value of the certificate, together with simple interest shall be payable. Such simple interest shall be calculated on the face value at the rate applicable from time to time to single accounts for the complete months for which the certificate has been held. The difference between the aforesaid simple interest and the interest accruing shall be deemed to be the discount.

After the expiry of 3 years from the date of the certificate, the amount payable inclusive of interest accrued and after adjustment of discount, shall be as specified by the government from time to time.

If a certificate is lost or destroyed or stolen or mutilated or defeated, a duplicate certificate in lieu of it can be issued on payment of prescribed fee.

ENCASHMENT AT MATURITY:
After 6 years of the date of issue, the certificates can be encashed at the office of issue or at an office other than the office of issue, in which case the certificates will be verified from the office of issue before encashment.

The interest on these certificates will be liable to tax in excess of the limit prescribed under Section 80L of the Income Tax Act on the basis of annual accrual rate.