Overview of National Savings Certificate (NSC) The National Savings Certificate or

NSC is a variation of small saving scheme of India.

It is issued by the Government of India. The unique aspect of the National Savings
Certificate (NSC) is that it can be bought by people under the age limit of eighteen years.

Terms and Conditions of Buying National Savings Certificate (NSC)

As per the rules that have been laid down by the Government of India only the following
categories of customers are allowed to buy a National Savings Certificate (NSC):
·0 Members of a Hindu Undivided Family
·1 Anyone above the age of 18 can buy a National Savings Certificate for himself or
for a minor.
·2 Two people over the age of eighteen can together buy a National Savings
Certificate.
·3 Any trust can buy a National Savings Certificate.
·4 The minors are also eligible to buy a National Savings Certificate

Availability of National Savings Certificate (NSC)

The National Savings Certificates are normally sold at the post offices across India.

Term Periods of National Savings Certificate (NSC)

The maturity period of a National Savings Certificate is six years.

Nomination and Transferability Benefits of National Savings Certificate (NSC)

The National Savings Certificate or NSC provides its owners with nomination facilities.
The owner may also transfer the particular National Savings Certificate from a post office
to another one. The ownership of the National Savings Certificate can be changed from
one person to another. However, such a transfer is only permitted under specified
circumstances.

Deposit Limits and Denominations of National Savings Certificates (NSCs)

There is no upper limit of investing in the National Savings Certificates. The National
Savings Certificates (NSCs) are mainly sold in the following denominations:
·5 Rs.100
·6 Rs. 5000
·7 Rs. 500
·8 Rs. 10,000
·9 Rs. 1000
Maturity Value and Interest Rate provided by National Savings Certificates (NSCs)
The National Savings Certificates provide a maturity value of Rs. 160.10 if the value of
the particular certificate is Rs.100. The maturity values of other National Savings
Certificates having separate denominations are determined in proportion to the particular
denomination.
The income that is made from the interest provided by the National Savings Certificates
can be subjected to income tax. However, if the earning is invested again then it may not
be taxed.
What Is The Liquidity Of National Savings Certificates?
NSCs do not offer any scope of premature withdrawal except on death or forfeiture by
pledgee or by court order. However, NSCs can be transferred from one person to another
through the post office on the payment of a prescribed fee. They can also be transferred
from one post office to another. If a certificate is lost, destroyed, stolen or mutilated, a
duplicate can be issued by the post-office on payment of the prescribed fee.
TAX IMPLICATIONS
NSCs offer tax benefits as per the provisions of the Income Tax Act, 1961. Rebates are
available under Section 88 of the Income Tax Act, 1961 on both the principal as well as the
interest income. Under the provisions of this Section, an investor can reduce his tax liability by
Rs 12,000 by investing the maximum permissible sum of Rs 60,000 in one financial year.
Moreover, the annual interest income (till five years) is deemed reinvested under Section 88,
and is eligible for a 20 per cent tax rebate. The rebate is calculated @ 30 per cent if your gross
annual salary is upto Rs 1,00,000. However, the interest income at the end of the sixth year is
not eligible for tax breaks. The interest income every year also qualifies for exemption under
Section 80L of the Income Tax Act, which means that interest income upto Rs 9,000 is tax-
exempt. Thus, while you can claim 20 per cent tax rebate on reinvested interest income, the
entire interest income will be tax-free if it is lower than Rs 9,000. An added advantage is that
TDS (Tax Deductible at Source) is not applicable on the NSC.

Public Provident fund

Created/updated on: 03/02/2007.

·10 The Public Provident Fund Scheme is a statutory scheme of the Central
Government of India.
·11 The Scheme is for 15 years.
·12 The rate of interest is 8% compounded annually.
·13 The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year.
·14 One deposit with a minimum amount of Rs.500/- is mandatory in each financial
year.
·15 The deposit can be in lumpsum or in convenient installments, not more than 12
Installments in a year or two installments in a month subject to total deposit of
Rs.70,000/-.
·16 It is not necessary to make a deposit in every month of the year. The amount of
 deposit can be varied to suit the convenience of the account holders.
·17 The account in which deposits are not made for any reasons is treated as
discontinued account and such account can not be closed before maturity.
·18 The discontinued account can be activated by payment of minimum deposit of
Rs.500/- with default fee of Rs.50/- for each defaulted year.
·19 Account can be opened by an individual or a minor through the guardian.
·20 Joint account is not permissible.
·21 Those who are contributing to GPF Fund or EDF account can also open a PPF
account.
·22 A Power of attorney holder can neither open or operate a PPF account.
·23 The grand father/mother cannot open a PPF behalf of their minor
grand son/daughter.
·24 The deposits shall be in multiple of Rs.5/- subject to minimum amount of
Rs.500/-.
·25 The deposit in a minor account is clubbed with the deposit of the account of the
Guardian for the limit of Rs.70,000/-.
·26 No age is prescribed for opening a PPF account.
·27 Interest is not contractual but rate is notified by Ministry of Finance, Govt. of
India, at the end of each year.
·28 The facility of first withdrawal in the 7th year of the account subject to a limit of
50% of the amount at credit preceding three year balance. Thereafter one
Withdrawal in every year is permissible.
·29 Pre-mature closure of a PPF Account is not permissible except in case of death.
·30 Nominee/legal heir of PPF Account holder on death of the account holder can not
continue the account, but account had to be closed.
·31 The account holder has an option to extend the PPF account for any period in a
block of 5 years on each time.
·32 The account holder can retain the account after maturity for any period without
making any further deposits. The balance in the account will continue to earn
interest at normal rate as admissible on PPF account till the account is closed.
·33 One withdrawal in each financial year is also admissible in such account.
·34 The PPF scheme is operated through Post Office and Nationalized banks.
·35 PPF account can be opened either in Post Office or in a Bank.
·36 Account is transferable from one Post office to another and from Post office to
Bank and from Bank to Post office.
·37 Account is transferable from one Bank to another bank as well as within the bank
to any branch.
·38 Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
 ·39 The interest on deposits is totally tax free.
·40 Deposits are exempt from wealth tax.
·41 The balance amount in PPF in PPF account is not subject to attachment under any
order or decree of court in respect of any debt or liability.
·42 Nomination facility available.
·43 Best for long term investment.
National Savings Certificate
Created/updated on: 03/02/2007.

·44 Minimum investment Rs. 500/- No maximum limit.

·45 Rate of interest 8% compounded half yearly.
·46 Rs. 1000/- grow to Rs. 1601/- in six years.
·47 Two adults, Individuals, and minor through guardian can purchase.
·48 Companies, Trusts, Societies and any other Institutions not eligible to purchase.
·49 Non-resident Indian/HUF can not purchase.
·50 No pre-mature encashment.
·51 Annual interest earned is deemed to be reinvested and qualifies for tax rebate for
first 5 years under section 80 C of Income Tax Act.
·52 Maturity proceeds not drawn are eligible to Post Office Savings account interest
for a maximum period of two years.
·53 Facility of reinvestment on maturity.
·54 Certificate can be pledged as security against a loan to banks/ Govt. Institutions.
·55 Facility of encashment of certificates through banks.
·56 Certificates are encashable any Post office in India before maturity by way of
transfer to desired post office.
·57 Certificates are transferable from one Post office to any Post office.
·58 Certificates are transferable from one person to another person before maturity.
·59 Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or
defaced certificate.
·60 Nomination facility available.
·61 Facility of purchase/payment to the holder of Power of attorney.
·62 Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.
·63 Interest income is taxable but no TDS
·64 Deposits are exempt from Wealth tax.