Article explains What is National Savings Certificate, Limit for Investment in NSC, Tax treatment of NSC Investment and Interest on NSC, What you must ensure in respect of NSC while filing Income Tax Return, Why Non-Resident Cannot Invest in NSC, Denominations in which NSC certificates shall be issued, Where to Purchase NSC , Main Features of NSC VIII Issue, Main Features of NSC IX Issue.
Page Contents
- What is National Savings Certificate?
- Limit for Investment in NSC
- Tax treatment of NSC Investment and Interest on NSC
- What you must ensure in respect of NSC while filing Income Tax Return
- Non-Resident Cannot Invest in NSC
- Denominations in which NSC certificates shall be issued
- Where to Purchase NSC
- Main Features of NSC VIII Issue
- Main Features of NSC IX Issue
What is National Savings Certificate?
National Savings Certificate (NSC) is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public.
National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while (i) Investing, (ii) during the life and (iii) at the time of maturity of the Investment.
Limit for Investment in NSC
A minimum of one thousand rupees and any sum in multiples of one hundred rupees may be deposited in an account. There shall be no maximum limit for deposit in an account or in accounts held by an account holder.
Tax treatment of NSC Investment and Interest on NSC
Deposits up to Rs. 1.50 lakh in NSC qualify for Deduction Section 80C of the Income Tax Act. Accrued interest on NSC also qualifies for deduction u/s. 80C.
NSC interest is taxable. However, as it is a cumulative scheme (e.g. interest is not paid to the investor but instead accumulates in the account), each year’s interest is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Sec 80C, thereby making it tax-free. Only the final year’s interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the earlier years and the capital amount.
What you must ensure in respect of NSC while filing Income Tax Return
To benefit from this feature of reinvested interest and its deduction, it is important to declare the accrued interest on NSC on a yearly basis in your tax return under the head “Income from Other Sources”. Under deductions, you will claim accrued interest for all the years except the last year under Sec 80C as reinvested NSC interest. Both cancel each other out, making the interest in effect tax-free.
Non-Resident Cannot Invest in NSC
Non-Resident Indians are not eligible to purchase the National Savings Certificates.
Denominations in which NSC certificates shall be issued
The National Savings Certificates (IX Issue) shall be issued in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000.
Can NSC be Purchased Jointly and on behalf of minor
Types of Certificates and Issue thereof,—
(1) The certificates shall be of the following types, namely:—
(a) Single Holder Type certificates;
(b) Joint ‘A’ Type Certificates; and
(c) Joint ‘B’ Type Certificates;
(2) Detailed description of types are as under:
(a) A Single Holder Type certificate may be issued to an adult for himself or on behalf of a minor or a person of unsound mind of whom he is the guardian; or by a minor who has attained the age of ten years;
(b) A Joint A Type certificate may be issued jointly to three adults payable to both the holders jointly or to the survivor,
(c) A Joint ‘B’ Type certificate may be issued jointly to three adults payable to either of the holders or to the survivor;
Where to Purchase NSC
National Savings Certificates (NSC) are certificates issued by Department of the post, Government of India and are available at most post offices in the country. This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.
Main Features of NSC VIII Issue
- Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
- No maximum limit for investment.
- No Tax deduction at source.
- Certificates can be kept as collateral security to get the loan from banks.
- Investment up to INR 1,50,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
- Trust and HUF cannot invest.
Main Features of NSC IX Issue
- No maximum limit for investment. Minimum Investment Rs. 100
- Available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
- A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.
Buy National Savings Certificates (NSCs) every month – Re-invest on maturity and relax – On retirement, it will fetch you monthly pension as the NSC matures.
(Republished with Amendments)
I have purchase nsc 35000/- +16426 INTEREST on 4-2-17 & rs 15000+7142 INTEREST on 24-8-16. I have not shown in income tax return due to my other investment complete rs 150000/-. Now this year both nsc is mature & shows in AIS . TOTAL nsc interest 23568 which amount is taxable for this need your help.
I have invested 30lacs in NSC last year. Is it compulsory to deposit Tex on NSC interest every year or can be paid in total at the time of maturity. Please suggest.as this time I have not enough money to pay the advance Tex
I purchased NSC VIII ISSUE for ₹5,00,000 On 7.01.2021; Now I have to file my return for the FY 2020-2021 (AY 2021-22) ; how much interest I have to add with my income for arriving at the taxable income FOR FY 20-21?
I have 2 NSC IX certificates of Rs 10000 each made in 2014. So it is going to mature in 2024. Can I withdraw it right away in 2021, i.e 7 years into the maturity period? and if so, will i get any interest or just the principal amount? also if i do get interest then how much?
Thanks to anyone who goes through the trouble of explaining me.
I claimed the deduction u/a 80C for nsc purchase in FY18-19. If I will transfer this NSC Certificate to my Father then what will be tax implications?
I had invested in NSC INR 1,00,000 in the year 2014 & got the matured amount of INR 151620 this year.So the interest amount is INR 51620. Now since the last 5 years, I have not shown under 80C “Interest on NSC”. but , after maturity total amount re-Invest with Int. and same day re invest in NSC 151620/- please advice Int. AMT. 51620 are taxable or not for the ASS. YEAR 2019-20
I had invested in NSC INR 1,70,000 in the year 2013 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 5 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC(INR 88000) under my income. Then kindly suggest me , how can I do that.
NSC opened 2020 can be shown for Tax saving doc for the next year ? since I have deposited more than 1.5 lakh under 80C..Can any one suggest me ?
Hi,
Hope y’all doing well.
I have a question about NSC final year interest. Request you to please revert.
I want to purchase NSCs worth 30 Lakhs say on this FY.
What will be my total overall interest in year 2025? And how much tax do I gotta pay? Would that be on last year’s interest only or on the accumulated interest throughout.
Kindly advise.
Thank you!
I purchased NSC VIII ISSUE for ₹5,00,000 On 15.01.2020; Now I have to file my return for the FY 2019-2020 (AY 2020-21) ; how much interest I have to add with my income for arriving at the taxable income?
can nominee be a NON RESIDENT INDIAN
I had invested in NSC INR 1,70,000 in the year 2014 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 4 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC under my income “Interest on NSC”. Then kindly suggest me , how can I do that.erest on NSC”.
I had invested in NSC INR 1,70,000 in the year 2014 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 4 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC under my income. Then kindly suggest me , how can I do that and what amount i must show “Interest on NSC” in this yr 2018-19
I want to purchase NSC for my child who is 17 years old. During maturity he will be 22 yrs. Will the interest earned be added to my income or my child’s income.
Hi, i have brought NSC (VIII Issue) in June 2016, i brought 10 bonds each cost Rs.10,000. what is the total maturity of bonds after 05 years on 1 lakh and what is the exact interest at that time of June 2016?
I had invested in NSC INR 1,70,000 in the year 2013 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 5 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC(INR 88000) under my income. Then kindly suggest me , how can I do that.
I got a Policy of amount sum assured 5 lakh for the term of 10 years ,risk covering from 3Feb 2012 .Its installment premium amount was Rs 25,000 annually i.e.,i paid RS 25,000 x 4 =1,00,000. This policy was continued from 2012 -2016 i.e ., 4 years ,but due to some financial problems policy was lapsed ,terminated and refunded behalf of my policy as on FEB 2017,the refunded amount was Rs 1,01,600 in my savings bank joint account, mode of operation either or survivor.Due to mistake i/we didn\\\\'t mentioned this amount in assessment year 2017-2018,can i mention the afore discussed amount is assessment year 2018-2019. In case if i have to pay the TAX,which amount is TAX payable 1,01,600 or 1,600 ???? Please sort out my QUERY ! ! ! **WITH LOTS OF REGARDS**