National Savings Certificate

 INTRODUCTION
Post Office Savings Bank-included in the Union List vide item No. 39 of Seventh Schedule
of the Constitution of India.
 Various Schemes framed by the Central Government under :
· Government Savings Bank Act, 1873,
· Government Savings Certificates Act, 1959,
· Public Provident Fund Act, 1968.
Ø Two non-statutory schemes- introduced through executive orders.

v OBJECTIVE :
 Small savings schemes are designed to provide safe & attractive investment options to
the public and at the same time to mobilize resources for development.

v OPERATING AGENCIES :
 These schemes are operated through about 1.54 Lakh post offices throughout the
country.
 Public Provident Fund Scheme is also operated through about 8000 branches of public
sector banks in addition to the post offices.
 Deposit Schemes for Retiring Employees are operated through selected branches of
public sector banks only.

v PROMOTION :
National Savings Organization (NSO) is responsible for national level promotion of these
schemes through publicity campaigns and advertisements in audio, video as well as print media.

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 pledge 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.

National Savings Certificate features

• Minimum investment Rs. 500/- No maximum limit.

• Rate of interest 8% compounded half yearly.
• Rs. 1000/- grow to Rs. 1601/- in six years.
• Two adults, Individuals, and minor through guardian can purchase.
• Companies, Trusts, Societies and any other Institutions not eligible to purchase.
• Non-resident Indian/HUF can not purchase.
• No pre-mature encashment.
• Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5
years under section 80 C of Income Tax Act.
• Maturity proceeds not drawn are eligible to Post Office Savings account interest for a
maximum period of two years.
• Facility of reinvestment on maturity.
• Certificate can be pledged as security against a loan to banks/ Govt. Institutions.
• Facility of encashment of certificates through banks.
• Certificates are encashable any Post office in India before maturity by way of transfer to
desired post office.
• Certificates are transferable from one Post office to any Post office.
• Certificates are transferable from one person to another person before maturity.
• Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or defaced
certificate.
• Nomination facility available.
• Facility of purchase/payment to the holder of Power of attorney.
• Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.
• Interest income is taxable but no TDS
• Deposits are exempt from Wealth tax.
NATIONAL SAVINGS SCHEME CERTIFICATE VIII issue (NSC)
Sl. Name of the Interest Maturity Limit of Deposit I.T.benefit Place of Deposit
No. Scheme Period
NSC VIII Issue 8.16% 6 years Min:Rs.100 As announced by the All HPOs and authorized
Max: No Limit Government of India from Post Offices
time to time

National Savings Certificates (NSC) is certificates issued by Department of post,

Government of India and are available at all post office counters in the country. It is a long term
safe savings option for the investor. The scheme combines growth in money with reductions in
tax liability as per the provisions of the Income Tax Act, 1961. The duration of a NSC scheme is
6 years.

Return:
It is having a high interest rate at 8% compounded half yearly. Post maturity interest will be paid
for a maximum period of 24 months at the rate applicable to individual savings account. A 1000
rs denomination certificate will increase to 1601Rs. on completion of 6 years.

Interest rates for the NSC Certificate of Rs 1000

Year Rate Of Interest

1 year Rs 81.60
2 years Rs 88.30
3 years Rs95.50
4 years Rs103.30
5 years Rs 111.70
6 years Rs 120.80

Advantages:
Tax benefits are available on amounts invested in NSC under section 88, and exemption can be
claimed under section 80L for interest accrued on the NSC. Interest accrued for any year can be
treated as fresh investment in NSC for that year and tax benefits can be claimed under section 88.
NSCs can be transferred from one person to another through the post office on the payment of a
prescribed fee. They can also be transferred from one post office to another. The scheme has the
backing of the Government of India so there are no risks associated with your investment.

How to start:
Any individual or on behalf of minors and trust can purchase a NSC by applying to the Post
Office through a representative or an agent. Payments can be made in cash, cheque or DD or by
raising a debit in the savings account held by the purchaser in the Post Office. The issue of
certificate will be subject to the realization of the cheque, pay order, DD. The date of the
certificate will be the date of realization or encashment of the cheque. If a certificate is lost,
destroyed, stolen or mutilated, a duplicate can be issued by the post-office on payment of the
prescribed fee.

Purchase of Certificate:

A Certificate can be purchased from all Head Post Offices and authorized Post Offices. A
Certificate can be purchased by an adult for himself or jointly, by an adult on behalf of a minor.
Any person desirous to purchase National Savings Certificate, shall apply in a prescribed Form
in any Post Office, in person or through an authorized agent Small Savings.

Payment:

Payment for the purchase of the Certificate may be made to a Post Office in cash, locally
executed cheque, order, demand draft drawn in favour of Postmaster, a duly signed Withdrawal
Form with the Passbook for withdrawal from the Post Office Savings Bank Account or surrender
of a matured old certificate duly discharged as "Received payment through issue of fresh
certificate vide application attached."

Rate of Interest:

Rate of Interest is 8.16 per cent compounded half yearly and paid after the maturity period of Six
years along with the principal amount. The interest, as specified in the table below, shall accrue
to the holder of the certificate the end of each year and such interest shall be deemed to have
been re invested on behalf of the holder and aggregated the amount of face value of the
certificate.

Encashment:

The Certificate can be encashed after Six years. The Certificate can be encashed at the Post
Office at which stands registered or it can also be encashed at any other Post Office if the Office-
In-Charge of that Post Office is satisfied verification from the office of its registration that the
person presenting the Certificate for encashment is entitled to.

The person entitled to receive the amount due under a Certificate shall, on its encashment, sign
on the back thereof in token of having received the payment. If the Certificate is purchased on
behalf of a minor who has since attained majority, Certificate shall be signed by such a person
himself, but his signature shall be attested either by the person who purchased the Certificate on
his behalf or by any person who is known to the Postmaster.

In case of death of the holder, in respect of which a nomination is in force, the nominee or
nominees shall be entitled encash the Certificate at any time before or after the maturity of the
Certificate or they can sub-divide the Certificate appropriate denominations in favour of
individual nominees or two adult nominees jointly. For this, the surviving nominees shall make
an application to the Postmaster, supported by the proof of death of the holder.

 Rs.100 grows to Rs.160.10 on maturity with interest rate of 8 per cent

compounded half yearly
 Minimum investment Rs.100. No maximum limit
 Available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000
 Deposits up to Rs.100000 qualify under section 80C of the Income Tax Act
 Interest accruing annually is automatically reinvested, and such re-invested interest
will also qualify for
  t ax rebate under section 80C of the Income Tax Act
 No tax deduction at source

Premature Encashment:

A Certificate may be prematurely encashed- in case of If the Certificate is encashed within one
year from the date of Certificate, only the face value of the Certificate shall payable. If the
Certificate is encashed after expiry of One year but before the expiry of Three years from the
date Certificate, an amount equivalent to the face value of the Certificate together with simple
interest shall be payable. If Certificate is encashed after the expiry of Three years from the date
of Certificate, the amount payable, inclusive of interest for the denomination of Rs.100 shall be
as given in the table.

National Savings Certificate Scheme was issued vide Government of India,

Ministry of Finance (DEA) Notification Number G.S.R. 496 (E) dated May 1,
1989 and further amended from time to time.

Replacement of Lost or Destroyed Certificate:

If a Certificate is lost, stolen, destroyed, mutilated or defaced, the person entitled thereto may
apply for the issue of a duplicate Certificate to the Post Office where the Certificate is registered.
application shall be accompanied by a statement showing particulars such as number, amount,
date of the Certificate and circumstances attending such loss, theft, destruction, mutilation or
defacement. If the Officer-In-Charge is satisfied, he issue a duplicate Certificate on the applicant
furnishing an indemnity bond in the prescribed Form with sureties or with bank's guarantee.

 death of the holder

 forfeiture by a pledge being Gazetted Government Officer when the pledge is in
conformity with these rules
 when ordered by the Court of Law
Period from The Date Of The Certificate To Amount Payable
The Date of Its Encashment Inclusive Of interest

M ore than 3 years but less than 3 years and 6 m onths121.15

M ore than 3 years and 6 m onths but less than 4 years125.09
M ore than 4 years but less than 4 years and 6 m onths129.16
M ore than 4 years and 6 m onths but less than 5 years133.36
M ore than 5 years but less than 5 years and 6 m onths137.69
M ore than 5 years and 6 m onths but less than 6 years142.16

 A National Savings Certificate can be transferred from one Post Office to another, by
making an application in prescribed Form.

 The Certificate can also be transferred from one person to another with the previous
consent in writing of the Postmaster or the Head Postmaster. The transfer can be made
after the expiry of a period of at least one year from the date of Certificate.

 On an application being made in the prescribed Form by the transferor and transferee, the
Postmaster may permit transfer of any Certificate (pledging of Certificate) as a security to
the President of India or Governor of a State in official capacity, to the Reserve Bank of
India or any scheduled bank, to any co-operative society, to a Corporation Government
company, to a local authority or to a housing finance company approved by the National
Housing Bank. transfer is permitted only for the whole amount and not for the part of it.
Transfer of the Certificate purchased on behalf of minor shall be permitted only if his
guardian certifies that the minor is alive and the transfer is for the benefit of minor. The
Certificate may be re-transferred to the investor on the written authority of the pledgee,
with the previous sanction of the authorized Postmaster.

 National Savings Certificate can be purchased in Demat Form in select Post Offices.

Nomination:

 Nomination facility is available for the National Savings Certificate. If such nomination
is not made at the of purchasing the Certificate, it may be made by the single holder, the
 joint holder or the surviving joint holder, by applying in prescribed Form, at any time
after the purchase of the Certificate.
 No nomination shall be made in respect of a Certificate applied for and held by or on
behalf of a minor.
 A nomination made by the holder or holders of the Certificate may cancelled or varied by
submitting application in prescribed Form affixing postage stamps, together with the
Certificate to Postmaster.

Accrued Interest NSC

Accrued Interest per year on investment of Rs. 100/-(To take benefit of Income Tax Act under
section 80C)

Period of Investment

Till 1/1/1999 15/1/2000 1/3/2001 1/3/2002 After

31/12/1998 To To To To 01.03.2003
14/1/2000 28/2/2001 28/2/2002 28/2/2003
Int . Rate 12% 11.50% 11% 9.50% 9% 8%

1 year 12.40 11.83 11.30 9.72 9.20 8.16

2 year 13.90 13.23 12.58 10.67 10.05 8.83
3 year 15.60 14.80 14.00 11.71 10.97 9.55
4 year 17.50 16.54 15.58 12.85 11.98 10.33
5 year 19.70 18.51 17.35 14.10 13.10 11.17
6 year 22.40 20.69 19.31 15.47 14.29 12.08
Total Int. 111.50 95.60 90.12 74.52 69.59 60.12
Maturity 201.50 195.60 190.12 174.52 169.59 160.12
Amt.with
Interest

FAQ:

 How much can be invested in NSC?

Any amount can be invested in NSC. The NSC are available in the denominations of Rs.100,
Rs.500, Rs.1000, Rs.5000 and Rs.10000.

 What is the tenure of investment?

The NSC are issued for a fixed period of six years from the date of investment. The extension is
not possible.

 What is the rate of return?

Currently you get 8% per annum compounded half-yearly (twice a year).

 Is the interest taxable?

Yes, the interest is taxable as income from other sources. But the interest is also eligible for
deduction u/s 80C. That means you have to add this to income first and then you can claim this
as deduction u/s 80C (subject to the total limit of Rs.100000 allowed under this section). So if
you have already invested a total of Rs.100000 u/s 80C, you end up with a net addition to your
income. So plan accordingly.

NATIONAL SAVINGS
ORGANISATION (NSO) HEADQUARTERS:
Shri Anil Bhattacharya,
Joint National Savings Commissioner,
4thFloor, CGO Complex, Seminary
Hills,
NAGPUR-440006.
Tele. No. 0712- 2510866 &
PBX
Nos: 0712- 2510947/2510039/2510296/2510608
Fax: 0712- 2510424
REGIONAL OFFICES / CENTRES OF NSO:

Sl. Name of officer /

Sl.No. Name of officer / office
1 Shri Rajiv Sagar,
Regional Director, National Savings,
Udaipeth, R.G.Baruah Road,
GUWAHATI-781024.
Tele. No. 0361-2450434
Fax: 0361-2547293
2 Shri A. K. Chauhan,
Regional Director, National Savings,
4, Deen Dayal Upadhyaya Marg,
(1ST-
Floor),ICCW, Building,
NEW DELHI-110002.
Tele. No. 011-23237154
Fax: 011-23231627
3 Shri Mir Azmat Ali,
Regional Director, National Savings,
1ST Floor, F-Wing,
No. office
Shri B. R.
6 Raigar,
Regional Director, National
Savings,
4th Floor, ‘C’-Block,
Vitta Bhawan, Jyoti
Nagar,
JAIPUR-302005.
Tele./ Fax No. 0141-2740443
7 Shri B. Raju Babu,
Regional Director, National
Savings,
‘C’ Block, ‘D’ Wing,
Rajaji Bhawan, Basant Nagar,
CHENNAI-600090.
Tele./Fax No. 044-24916342
8 Shri T. Dasari,
Regional Director, National
Savings,
234/4, Nizam Palace, Acharya
 Kendriya Sadan,
Koramangala, Jagdish Chandra, Bose Road,
BANGALORE- 560034. KOLKATA-700020.
Tele./ Fax
Tele./Fax No. 080-25537105 No. 033-22470591
4 Shri Nassir Sajjad, 9 Shri Jameel Ashgar,
Regional Director, National
Regional Director, National Savings, Savings,
East & West Insurance Halwasia Court, Jazrat
Building, Ganj,
55, Mumbai Samachar Marg,
Fort, LUCKNOW-226001.
MUMBAI-400023.
Tele. 0522-
No. 2224876
Tele./ Fax No. 022-22661812 Fax : 0522-2219526
5 Shri P. C. Ekka, 10 Shri M. K. Malhotra,
Regional Director, National
Regional Director, National Savings, Savings,
CGO Complex, ‘A’ Block, SCO No. 3007-3008, Sector 22-D,
4th Floor, Seminary Hills, CHANDIGARH-160023.
NAGPUR – 440006.
Tele. 0172-
No. 2704560
Tele. No. 0712-2525482 Fax: 0172-2703186

DEPARTMENT OF POSTS INDIA

APPLICATION FOR PURCHASE OF NATIONAL SAVINGS CERTIFICATE (VIII

ISSUE)

To
The Postmaster ……….................................. Post office Serial No………..........

1. I/We hereby tender Rs. ..................................( Rupees ...............................................

.................................. only ) in cash/ by Cheque No………… ………….…. for
purchase of National Savings Certificate (VIII Issue) of the type Single /Joint A / Joint
B.

(a) In the name(s) of…………………………..

and…………………………...............................

(b) In case of minor, his date of birth……………………encashable by the minor’s

Parent/guardian Shri/Smt…………………………......................................................
2. I/We nominate the person(s) named below who shall, on my/our death, receive payment

Sl.No. Name of Nominee Full Address Date of Birth of Minor

Nominee
2 3 4
1

3. I/We hereby agree to abide by National Savings Certificates (VIII Issue) Rules,1989.

4. The Certificates may be made over to my/our agent

Shri/Smt............................................... ...................Authority No……………........ or
messenger who presents the application.

Signature/thumb impression of Investor

Date ..........................................

Address
……………………………....................
........................................................
Signature and Address of witness to ........................................................
nomination ……………………………………...........
……………………………....................
........................................................
........................................................
……………………………………..........
Received the certificate(s)
……………………………....................
……………………………....................

Signature of investor/messenger/authorised
 agent

Date ........................................
Delete whichever is not applicable

TO BE COMPLETED BY THE POST OFFICE

Sl. No. Issue Price Date of encashment Initials of Remarks like
of Rs. the Postmaster transfer,issue of
Certificates duplicate etc. with
initials
1 2 3 4 5

TOTAL

Date: ..................................... Signature of Postmaster

-----------------------------------------------------------------------------------------------------------------
-------------------------------

NATIONAL INSTITUTE OF CONSTRUCTION

MANAGEMENT AND RESEARCH, Pune

CORPORATE TAX PLANNING

“NATIONAL SAVING
CERTIFICATE”

SUBMITTED BY:

MR.SIDDESH PAI – P31040