Post Office National Savings Certificates

What is a Post Office National Savings Certificate?

The full form of NSC is National Savings Certificates, which are low-risk investment options offered by the Indian government through post offices. It offers tax deductions under Section 80C of the Income Tax Act. The investment begins with a minimum of ₹1,000 with a lock-in period of 5 years, making it a good investment option with zero risk.

Overview of Post Office National Savings Certificate

The key features of National Savings Certificate (NSC) include: 

Eligibility Criteria for Post Office National Savings Certificate

The eligibility criteria for investing in Post Office NSC are: 

• The applicant must be a citizen of India
• Age wise, there is no minimum or maximum age limit for individuals to invest in an NSC account in the Post Office.
• A guardian or parent can open an NSC account on behalf of a minor person or a person of unsound mind.
• If the minor has crossed 10 years, he can open his own NSC account.
• You can open a Single Holder Account, a Joint A Account (payable to all holders jointly), or a Joint B Account (payable to any one holder). 

Note: Certain entities are not eligible, including Hindu Undivided Families (HUFs), Trusts, and Public and private limited companies. Non-resident Indians (NRIs) cannot purchase new NSCs.

Historical Post Office National Savings Certificate Interest Rate List

The Ministry of Finance revises interest rates for the Post Office NSC scheme quarterly. Here are the historical rates from recent financial years.

How to Buy a National Savings Certificate Post Office? 

You can buy Post Office NSC either online or offline, following these easy steps: 

Offline Mode:

Step 1: Go to your nearest post office branch.

Step 2: Collect the application form (Form-1) or download and print it from the India Post website.

Step 3: Fill out the form, attach all required documents, and submit them with the initial investment by cash, cheque, or demand draft. 

Step 4: The post office will process your application and issue the NSC certificate. 

Online Mode:

Step 1: Access and log in your Department of Posts (DOP) internet banking account. 

Step 2: Go to "General Services" and then "Service Requests.

Step 3: Click "New Requests" and choose "NSC Account - Open an NSC Account."

Step 4: Fill in the investment amount and select the debit account linked to your PO savings account.

Step 5:  Review and accept the terms, then submit the transaction. You'll receive a deposit receipt. 

Post Office NSC Certificate Vs. Other Post Office Savings Schemes

The table compares key features of popular schemes, including NSC, PPF, and the 5-year TD.

Tax Benefits of Post Office National Savings Certificate Scheme

The tax benefits of Post Office NSC are:

• Section 80C Deduction: Your investment for NSC in Post Office is eligible for a tax deduction under Section 80C of the Income Tax Act, up to a limit of ₹1.5 lakh per financial year.
• Interest Accrual Tax Benefit: The interest earned each year (except for the final year) is considered reinvested in the scheme. This reinvested interest also qualifies for a deduction under Section 80C, enhancing your overall tax-saving potential. Tax laws are subject to change. 
• No TDS: While there is no Tax Deducted at Source (TDS) on NSC payouts, the subscriber is responsible for paying the applicable tax on maturity value. 

Premature Closure and Transfer of Account of NSC Post Office

Premature Closure

Premature withdrawal of an NSC certificate Post Office account is not generally permitted. It is only allowed in specific, exceptional circumstances:

• On the death of the account holder(s)
• On forfeiture by a pledgee who is a Gazetted Officer
• When ordered by a court

Note: If closed before one year, only the principal amount is paid back. If closed between one and three years, interest is paid at the rate applicable to a Post Office Savings Account.

Transfer of Account

A Post Office NSC account can be transferred from one individual to another, provided the transferee is eligible. Transfers are permitted in the following cases:

• On the death of the account holder to the nominee or legal heir
• On the order of a court
• To the surviving account holder(s) in a joint account

Steps to Request a Duplicate Post Office NSC Scheme Certificate

If your original NSC Post Office scheme certificate is lost or stolen, you can apply for a duplicate.

• Fill & Submit Form: Obtain Form NC-29 from any post office and submit it. 
• Attach a Statement: Include a statement with your name, account number, investment amount, and the reason for needing a duplicate.
• Provide Indemnity Bond: Submit an Indemnity Bond (Form NC-54a or NC-54b) to guarantee no misuse of the original certificate if it is found.
• Include FIR Copy: If the certificate was lost or stolen, attach a copy of the First Information Report (FIR).
• Processing: The post office will verify your application and issue a duplicate certificate.

Benefits of Post Office National Savings Certificate (NSC)

The NSC Post Office scheme investment return is a popular investment option for many investors due to its numerous benefits.

• Guaranteed Returns: The Post Office NSC investment plan offers a guaranteed return that is not subject to market fluctuations. The interest rate is fixed at the time of investment for the entire 5-year tenure.
• Low-Risk Profile: As a government-backed small savings scheme, the Post Office National Savings Certificate carries minimal risk of default, making it a highly secure investment.
• Loan Collateral: You can use your Post Office NSC certificates as collateral or security to obtain a secured loan from banks and NBFCs.
• Power of Compounding: The interest is compounded annually and reinvested. This power of compounding allows your investment to grow significantly over the 5-year period.