Wednesday, August 26, 2009

National Savings Certificate (NSC)

National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines adequate returns with high safety.

National Savings Certificate can be purchased by the following:
  • An adult in his own name or on behalf of a minor,
  • A minor,
  • A trust
  • Two adults jointly,
  • Hindu Undivided Family
National Savings Certificates are available in the denominations of Rs. 100, Rs 500, Rs. 1000, Rs. 5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates.

Period of maturity of a certificate is six years. Presently, maturity value of a certificate of Rs. 100 denomination is Rs. 160.10. Maturity value of a certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.

Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested. Income Tax rebate is available on the amount invested and interest accruing under Section 88 of Income Tax Act, as amended from time to time. Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time.

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