Features & Benefits of NSC
Fixed income: Currently, the scheme is generating a guaranteed return at the rate of 7.7% for investors. The returns offered by NSC have generally been higher than FDs.
Types: The scheme originally had two types of certificates - NSC VIII Issue and NSC IX Issue. The government discontinued the NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.
Tax saver: As a government-backed tax-saving scheme, you can claim up to Rs.1.5 lakh under the provisions of Section 80C of the Income Tax Act, 1961.
Start small: You can invest as low as Rs.1,000 (or multiples of Rs 100) as an initial investment, and increase the amount when feasible.
Interest rate: Currently, the rate of interest is 7.7% p.a. for Q1 FY 2024-25, which the government revises every quarter. It gets compounded annually but will be payable at maturity.
Maturity period: The maturity period is five years.
Access: You can purchase this scheme from any post office by submitting the necessary documents and undergoing the KYC verification process. Also, it is easy to transfer the certificate from one post office branch to another.
Loan collateral: Banks and NBFCs accept NSC as collateral or security for secured loans. To do this, the concerned postmaster should put a transfer stamp on the certificate and transfer it to the bank.
Power of compounding: The interest you earn on your investment gets compounded and reinvested by default, though the returns do not beat inflation.
Nomination: The investor can nominate a family member (even a minor) so that they can inherit it in the unfortunate event of the investor’s demise.
Corpus after maturity: Upon maturity, you will receive the entire maturity value. Since there is no TDS on NSC payouts, the subscriber should pay the applicable tax on it.
Premature withdrawal: Generally, one cannot exit the scheme early. However, they accept it in exceptional cases like the death of an investor or if there is a court order for it.
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