National Savings Certificates, or NSCs, is a government-backed fixed-income investment scheme offered by India Post’s small savings schemes. For risk-averse investors seeking steady returns that are generally greater than fixed deposits, NSC is thought to be the best option.
What is the interest rate on NSC
The interest rate is subject to quarterly assessment and revision by the Ministry of Finance. However, the government has kept NSC rates unchanged for this July- September quarter 2024. The government offers an interest rate of 7.7% on NSC.
Who can invest in NSC?
Investing in NSC is a viable alternative if you have a low tolerance for risk and don’t want to engage in volatile options. They provide guaranteed earnings and capital protection, making them a secure short-term investment alternative.
Collateral for Loans
If an investor chooses a secured loan, the majority of banks and NBFCs accept NSC certificates as security deposits or as collateral. In these cases, the bank or NBFC that will be disbursing the loan transfers this certificate to the bank or post office and attaches a transfer stamp to it.
Can NSC be transferred to other person?
Yes, NSC can be transferred from one person to another person on the following conditions only.
i)On the death of account holder to nominee/legal heirs.
(ii) On the death of account holder to joint holder(s).
(ii) On order by the court.
(iii) On pledging of account to the specified authority.
NSC tax benefits
Deposits qualify for deduction under section 80C of Income Tax Act. The first four years’ interest on NSC can also be claimed as an NSC investment deduction. This is because the interest is reinvested in the NSC. The whole maturity amount will be paid to you at the end of your investment period. On NSC returns, there are no TDS fees to pay. It would be your responsibility as an investor, nonetheless, to pay the relevant tax on the sum.
Deposit details
Minimum investment amount is Rs. 1000 and in multiple of Rs. 100 , no maximum limit. Any number of accounts can be opened under the scheme. The deposit shall mature on completion of five years from the date of the deposit.
Comparing with top banks 5-year FD interest rates
- NSC offers 7.7% on a tenure of 5 years for general and senior citizens.
- SBI offers 6.60% for general citizens and 7.50% for senior citizens on a five-year tenure.
- HDFC Bank offers 7% for general citizens and 7.50% for senior citizens on a five-year tenure.
- ICICI Bank offers 6.90% for general citizens and 7.40% for senior citizens on a five-year tenure.
- Axis bank offers 7% for general citizens and 7.50% for senior citizens on a five-year tenure.
