Post Office National Savings Certificate (NSC) is one of the most popular small saving schemes among Indians. You can invest in this scheme to generate a regular fixed income and at the same time for your retirement planning. Post Office NSC scheme is a safe investment option with an attractive interest rate and tax benefits.
The current post office NSC interest rate 2018 is 7.6% per year. National Saving Certificates are issued by the post offices in India and can be taken from any branch of the Indian postal service. By investing in the National Saving Scheme, you can get a tax benefit of up to Rs 1.5 lakhs under Sec. 80C of Income Tax Act.
In this article I will discuss everything about Post Office NSC like:
- Post Office NSC Interest Rate
- Where Can You Open an Account
- How to Open NSC in Post Office
- Important Features
- Online Payment & Premature Withdrawal Rules
- Minimum and Maximum Deposit Limit
Post Office NSC Interest Rate 2018
NSC account in post office will give you an interest rate of 7.6% per annum, compounded annually and payable at maturity. For example, for a 5 years NSC, Rs. 100/- will grow to Rs. 144.23 at the maturity. The 10 years NSC is discontinued now.
The interest rates are fixed periodically. Therefore, make sure to check the current interest rate of post office National Savings Certificate, before opening an account.
Where Can You Open an Account?
You can open the account in any of your nearest/ preferred post office.
Documents Required for Post Office National Savings Certificate
The needed documents to buy NSC are:
- The application form for the investment (Form 1). You can declare the investment amount and nominees through this form.
- Proof of identity
- Proof of address
If you purchase NSC on behalf of a minor, attestation by a guardian is mandatory. Also, signature of the nominee is required on the NSC certificate.
How to Open NSC in Post Office?
You can buy NSC certificates at post offices by filling up the application form along with ID proof. First of all, collect all the documents mentioned above.
Fill up the form carefully while providing the nominee details. Also, don’t forget to carry the original identity and address proof for verification purpose. Finally, complete the procedure to get started with your post office savings scheme.
Post Office National Savings Certificate Features
- NSC accounts are available in three types, namely single holder, joint certificate A and joint certificate B
- Maturity period for National Savings Certificates are 5 years (for certificates issued on or after .01.11.2011)
- NSCs are available for a minimum investment of Rs 100 and in multiples of Rs 100, there is no maximum limit
- Interest rates are 7.6% p.a. (compounded yearly) for 5 year NSC
- Individuals, joint individuals and minor supported by guardian can invest in National Savings Scheme
- Trusts, companies, Hindu Unified Families, NRIs cannot invest in NSC
- You can request for a duplicate NSC certificate in case the original is misplaced or gets destroyed
- You can get tax rebate under Sec 80C of IT Act for the deposited amount
- You can reinvest the annual interest accrued under Section 80C of Income Tax Act
- You can keep NSC certificates as collateral security to get loan from banks
- Nomination facility is available
- NSCs are not available online
- You can transfer your certificates from one post office to another, as well as from one person to other
Post Office National Savings Certificate (NSC) Tax Benefit
NSC in post office offers tax benefit under section 80C.
Minimum and Maximum Deposit in Post Office NSC Account
The minimum investment amount is Rs.100/- however, there is no maximum limit.
Post Office National Savings Certificate Online Payment Facility
This facility is currently available for RD in Post Office through Electronic Clearing Service (ECS). Also, if you have an agent, he or she can use the post office agent portal and do the online payment for you. Information on post office NSC online payment is not yet clear. However, you can ask your post office branch for exact details on this. Furthermore, you may also ask your agent for the availability of online payment mode.
Moreover, you can automate this scheme very easily. For that you need to open a saving bank account and give a request for automatic transfer of NSC interest to recurring deposit account through your savings account.
Post Office NSC Account Opening Form
You can download post office NSC account opening form from here.
FAQs on Post Office NSC
What is a National Saving Certificate?
NSC or National Savings Certificate is a small savings scheme which is mainly used as an investment and tax saving instrument. This Govt. backed savings bond is operated through the Indian Postal Service (India Post).
What are the different types of NSC certificates available?
Earlier there were two types of certificates – NSC VIII Issue and NSC IX Issue. The NSC IX Issue was discontinued in December 2015. Depending on who can open NSC, there are 3 types of accounts – single holder, joint A type certificate and joint B type certificate.
Is it good to invest in NSC?
Post office National Savings Certificate is a good investment option as it allow you to save tax with a good interest rate. There is no limit on how much you can invest, however, you can save only up to 1.5 Lakhs under section 80C of Income Tax Act.
What is the interest of NSC?
The NSC interest rate 2018 is 7.6% per annum. The interest is decided quarterly.
Is interest on NSC taxable?
NSC interest is taxable. However, the interest amount is accumulated in the account and it gets reinvested in your NSC account. The accrued interest on NSC qualifies for a tax deduction under Sec 80C and hence is tax-free.
Is NSC taxable on withdrawal?
Interest on National Savings Certificate is paid on maturity and is taxable as per your income tax slab. But the final interest on maturity does not get any tax benefit as it does not get re-invested.
Can I open post office National Savings Certificate online?
No, this facility is not yet available. Therefore, you need to open an account in the post office itself. However, after opening the account you may opt for the ebanking facility of India Post.
What is the maturity value of post office NSC?
You can use the post office National Savings Certificate calculator (NSC calculator) to calculate maturity amount. Also, the accounts that were opened on or after 8.12.07 and up to 30.11.2011 will enjoy an extra 5% bonus at maturity.
Is post office NSC premature encashment possible?
Generally, you cannot withdraw NSC before the maturity period of 5 years. But, under few circumstances premature withdrawal of NSC is permitted. And the permissible reasons for NSC certificate premature withdrawal are:
- On account of death of the NSC Holder/s (in case of joint holders)
- On forfeiture by a pledgee being a Gazetted Government Officer when the pledge is in conformity with these rules
- When ordered by a court of law
What is the tenure of post office National Savings Certificate premature closure?
Premature closure is permissible with the above rules.
What is the maturity period of NSC post office?
Previously there were two tenures – 5 years and 10 years. However, the 10 years NSC is closed now.
Hope you will find the article useful. Please feel free to share your queries and experiences, if any. Also, don’t forget to share this article with your friends who might want to open an account under Post Office National Savings Certificate.