NSC: Benefits Of Investing In The National Saving Certificate

Learn how to save money with NSC along with the benefits of investing in it.

<div class="paragraphs"><p>Image by Freepik</p></div>
Image by Freepik

The government of India has launched numerous schemes to promote the habit of saving and investing among individuals. Many such schemes allow you to invest small amounts and gain a good corpus later. One such scheme is the NSC. Read on to learn more about the scheme and its benefits.

What Is NSC?

National Savings Certificate, popularly known by the abbreviation NSC, is an investment scheme backed by the Indian government. It encourages business owners and salaried individuals to invest in small amounts for a good payout in the end.

Enlisted below are some key factors of the NSC:

  • An interest rate of 6.8% per annum.

  • Minimum investment starting at ₹ 1,000 per NSC.

  • Can be opened in any Post Office.

  • Lock-in Period of 5 years according to NSC VIIIth Issue.

  • Low-risk profile with guaranteed returns.

  • Tax benefits up to ₹ 1.5 lakh under Section 80C of the Income Tax Act.

Benefits Of National Savings Certificate

There are numerous benefits of the National Savings Certificate due to which the scheme has gained popularity among the masses. Enlisted below are some of these benefits:

  1. Small Investments - The investment required in this scheme is extremely minimal. It starts at ₹ 1,000 and has no upper limit. Moreover, since this scheme is a one-time payment scheme, you don’t have to worry about multiple payments. Just a single lump-sum investment is all that is needed.

  2. Lucrative Interest Rates - Although NSC works similar to an FD, the interest rates are definitely higher than an FD; hence making it a better investment choice.

  3. Power Of Compounding - During the lock-in period of 5 years, any interest earned annually gets compounded and reinvested. So in the next year, you earn interest on that amount as well getting you double benefits.

  4. Guaranteed Returns - In this scheme, you get guaranteed returns at the end of your maturity period of 5 years. This includes your entire corpus along with all the interest earned over the years.

  5. Tax Benefits - As this is a government-backed tax-saving scheme, the entire amount invested in an NSC qualifies for a tax rebate under Section 80C of the Income Tax Act. However, this comes with an annual cap of ₹ 1.5 lakh.

  6. Acts As Loan Collateral - Several Banks and NBFCs accept your NSC as collateral or security for secured loans. All you need to do is get your Postmaster to put a stamp on your certificate and transfer it to the bank.

  7. Easy Transfer - Transferring your NSC from one post office to another is extremely easy. Similarly, you can also transfer your NSC from one person to another. In this case, the initial owner’s name will be rounded off and the new owner’s name will be added.

How To Invest In NSC?

Earlier, you could only get an NSC offline, from a post office. However, now you can invest in NSC both online as well as offline. Here’s how you can do it in both modes:

Invest In NSC Offline

  1. Fill out the NSC Application Form available online and get a printout, or, fill out the offline form available at the Post Office.

  2. Submit self-attested copies of all the required KYC documents while carrying the originals for verification.

  3. Make payment for your deposit amount via Cash or Cheque.

Once this purchase is completed and successfully processed, individuals can then collect their printed NSC from the post office.

Invest In NSC Online

  1. Login to the DoP eBanking portal.

  2. Go to the “General Services” section and click on “Service Requests”.

  3. Now choose “New Requests”.

  4. Select “NSC Account – Open an NSC Account (For NSC)”.

  5. Now enter your deposit amount and select the debit account linked to your post office savings account.

  6. Tap on “Click Here”, read the terms and conditions and proceed.

  7. Enter Transaction Password and click on “Submit”.

That’s it! Your application has been submitted. You can either view or download the transaction receipt. You can even view details of your account, once opened, on the same website.

This article does not intend to pass on any financial advice and BQ Prime does not endorse any of the funds/schemes mentioned above. Please invest at your own discretion.