The Government of India’s National Savings Certificate (NSC) – an investment scheme which develops your Savings safely and also provides you tax advantages. This blog will explain eligibility criteria, NSC interest rate, NSC interest rate 2024, NSC interest rate calculator & tax savings advantages of NSC scheme.
What exactly is NSC (NSC full form)?
The NSC (National savings Certificate) is a guaranteed low risk savings fixed income scheme. It’s a government backed scheme meaning your investment has got the sovereign guarantee of the Indian government.
NSC Eligibility
NSC scheme is open to all Indians residing outside of Hindu Undivided Families (HUFs), trusts & non resident Indians (NRIs). To invest in NSC an investor has to meet the following criteria:
- Indian citizenship
- Age ten and over
- Investment in their individual capacity (not as an HUF or trust)
The NSC Interest Rate offered by the government is one of the major attractions of the NSC scheme. The interest rate is set and is governed by regular revisions by the government. The NSC interest rate 2024 continues to be established at 7.7% just for the first quarter of the financial year 2024-25 (April to June 2024). This rate is compounded annually and payable at maturity.
To figure out interest on your NSC investment, use an NSC interest rate calculator online.
Tax Benefits of NSC Investment
The NSC interest rate is variable and is generally revised by the government each quarter.
Your Interest on your NSC investment is taxable at your income tax slab rate (NSC Interest taxability). But the scheme provides tax advantages under Section 80C of the Income Tax Act 1961 which might lessen your general tax burden.
The tax savings is a significant advantage of investing in NSC. They might be tax deductible under Section 80C of the Income Tax Act, 1961.
You must show the NSC interest in your income tax return and add the investment amount, certificate quantity and interest earned to receive the tax advantage.
NSC interest computation for income tax is easy. NSC interest is added to your overall earnings and the eligible deduction under Section 80C is claimed on that income.
Income and NSC tax (NSC in income tax) on National Savings Certificate (i.e. National Savings Certificate NSC) must be included in your income tax return. Though you can deduct the investment sum under Section 80C up to Rs. 1.5 lakh every financial year.
Other Features of NSC
Other features of the NSC scheme include low interest rate and tax saving feature:
- Fixed Income: The NSC has a guaranteed rate of return and is an appropriate investment for the risk averse who want stable returns.
- Low Minimum Investment: You can invest in NSC from just Rs. 2,000 (or multiples of Rs. 100), therefore being accessible to all investors with various investment capacities.
- Maturity Period: Maturity of NSC is 5 years, and after that you may redeem your money plus interest.
- Loan Collateral: NSC certificates may be collateral or security for secured loans from banks along with non-banking financial companies (NBFCs).
- Nomination Facility: You can name a family member (even a minor) to get the NSC investment upon your death.
- Transferability: NSC certificates may be transferred from post office to post office if investors relocate.
- Compounding Effect: The interest on your NSC investment is compounded yearly so your investment grows faster because of the compounding effect.
Investing in NSC: The Process
To invest in the NSC scheme, visit almost any post office department in India and also stick to these steps:
- Collect the NSC application form or print from the official site.
- Complete the form with your personal details and an investment amount.
- Return the completed form in addition to self-attested duplicates of your KYC documents (identity proof, address proof, and photo).
- Pay out the investment amount and get an NSC certificate.
Or you can invest online in NSC making use of your existing post office savings account through the Department of Posts (DOP) net banking facility.
Closing Thoughts
The NSC offers a secure and tax efficient investment choice for low risk savings investors. With their guaranteed returns, tax-saving advantages under Section 80C along with other appealing features, the NSC scheme is a perfect option for all those looking to build their savings and lessen their tax liability. Whether you’re a salaried professional, a self employed individual, or a retired person, the NSC can complement your investment portfolio.
FAQs
Is interest on NSC taxable at maturity?
While interest earned on NSC is not tax-free, interest income is considered reinvested and is taxable under Section 80C. This means the interest is not taxed every year but is taxed only at maturity or withdrawal.
Is TDS charged on NSC interest?
No, interest earned on investments in NSC is not subject to TDS. The tax payable is for the interest paid in the preceding year only and the owner of the certificate should report the income and pay the fees.
Is NSC Tax Free?
No, the NSC scheme isn’t tax free. While the investment amount is deductible under Section 80C, interest on NSC is taxable at your income tax slab rate.
What is the NSC interest rate 2024 or is NSC tax free?
NSC interest rate is 7.7% pa in 2024.
How much interest on NSC is tax-free?
Interest earned on NSC is assumed to be reinvested (returned to the initial investment) for the first four years and carries a tax credit up to the aggregate annual limit of 1.5 lakh.
Which among FD or NSC is better?
NSC has several advantages over fixed deposits such as lower risks and higher interest rates. That is because TDS is taken from FD interest. Although FDs offer a slightly higher interest rate, post-tax returns may be lower because of the TDS deduction.
What are the benefits of NSC?
NSC investments are taxable under Section 80C of the Income tax Act. The investor can claim deductions of up to Rs. 1.5 lakh, which reduces their taxable income. Also, interest on NSC compounds annually, promoting investment growth.
