National Savings Certificate (NSC)

Prime Minister Narendra Modi, while filing his electoral nomination on May 13, 2024, to contest from Uttar Pradesh's Varanasi Lok Sabha seat, disclosed his investments.

1. After his biggest investment totalling around Rs 2.85 crore in fixed deposits (FDs) at the State Bank of India (SBI), his 2nd biggest investment was in the National Savings Certificate (NSC) scheme.
2. PM Modi declared that Rs 9,12,338 was lying in the National Savings Certificate (NSC) scheme, a post office investment scheme.

What is a National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a fixed-income investment scheme launched by the Government of India.

1. It aims to encourage investments and tax savings, primarily among low- to mid-income investors.

Key Features of NSC:

1. Interest Rates: NSCs earn annual fixed interest, revised quarterly by the government, ensuring regular income.
2. Maturity Period: NSCs have a 5-year maturity period.
3. Investment Limit: There is no upper limit on the amount of NSCs that can be purchased.
4. Tax Savings: NSCs qualify for tax savings under Section 80C of the Income Tax Act, with a maximum deduction of Rs. 1.5 lakhs per year.
5. Accessibility: NSCs can be easily purchased from any post office with minimal paperwork. Transferring certificates between post offices or from one person to another is straightforward, without impacting interest accrual or maturity.
6. Loan Collaterals: NSC certificates can be used as collateral for secured loans in banks and NBFCs.
7. Nomination: Investors can nominate a family member, including minors, to inherit the certificate in the event of the investor's demise.
8. Premature Withdrawal: Early withdrawals are generally not permitted except in specific cases like the investor's death, a court order, or forfeiture by a pledgee.

Eligibility Criteria for NSC:

1. Hindu Undivided Families (HUFs), trusts, private, and public limited companies are not eligible to invest in NSC.
2. Only resident Indian citizens are eligible to invest in NSC. Non-resident Indians (NRIs) are not eligible.
3. There is no age limit for individuals to purchase an NSC.

Section 80C of the Income Tax Act:

Section 80C of the Income Tax Act allows for certain expenditures and investments to be exempt from income tax.

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