National Savings Scheme Rules

The Government of India has formed the National Saving Scheme which issues the National Savings Certificate to increase the tax benefits among the taxpayers. The Indian Postal Service is responsible for issuing the National Savings Certificate. Also, national savings certificate is used to claim the tax deduction under 80C of Income Tax Act. In this article, we focus on the National Savings Scheme Rules in detail.

Features of the National Savings Certificate

The salient features of national savings certificate are listed below:

This scheme is created for the employers, government employees and other salaried people who fall under the income tax assessment.
The minimum amount to be invested in this scheme is Rs.100 with no maximum amount.
The rate of interest on the five-year deposit is 8% for the current year.
The maturity period for the national savings certificate is for five years.
The loans can be availed from the banks against the certificate by producing them as collateral.
The investor can purchase in the denominations of Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000.
The NSC does not contain tax deduction at source. i.e. No TDS.
Trust and HUF cannot invest in NSC.
It allows the investor for tax savings under section 80C of the income tax act, up to Rs.1.5 lakhs annually.

Premature Withdrawal

NSC holds a lock-in period of 5 years with premature withdrawal permitted only in specific cases such as:

In case of death of NSC holder.
In case of forfeiture by a pledgee who is a Government Officer.
In case of the order of the court for premature withdrawal of NSC.

Transfer of Ownership

The transfer of ownership from one person to another person can be done only once from the date of issuance to the date of maturity of the certificate. At the time of transfer, the old certificate will not be replaced. Name of the existing investor will be rounded, and the name of the new holder will be marked on the old certificate and the purchase application (for non-CBS post offices). The postmaster will certify the document with the authorised signature along with the date stamp of the post office and his or her designation stamp on the certificate.

Transfer of NSC from One Post Office to another Post Office

NSC can be carried from one post office to another post office without affecting the interest accrual or maturity of the original certificate. NSC gives the following transfer options are available to an investor : NSC Transfer from one post office to another can be performed by filling out and furnishing the Form NC-32 at the post office where the original certificate was issued. Also, transfer of National Savings Certificates can be done from one holder to another by applying through the Form NC-34 at the NSC issuing post office. This transfer can be done only once until the period of scheme maturity.

Loan Against National Savings Certificates

The investors are eligible to obtain a loan against your National Savings Certificate investments concerning some major terms and conditions are mentioned below:

Only resident Indians can request for a loan against National Savings Certificate.
A few leading private and public-sector banks currently provide this facility.
The limits applicable to loan against NSC depends upon the remaining time up to maturity.
The interest rate will be differed based on individual loan applicant as well as the bank granting the loan.
The loan duration equals the residual maturity (time remaining till maturity) of the NSC utilised as collateral.

Note: The above mentioned are just some general features of loan against NSC, specific features such as margin, interest rate, loan duration etc. tend to vary from one lender to another.

Issuance of Duplicate National Savings Certificates

In case the original NSC certificate has been lost, seized, destroyed, damaged or mutilated, you can get a duplicate certificate. By applying through the Form NC-29 and furnishing it at the post office which issued the NSC that needs replacing. Key fields in the form include: Details of the certificate(s) such as – serial numbers, denominations, NSC issue, etc. Date on which the documents were obtained. The reason for requesting the duplicate certificate also needs to be mentioned among other details. Learn more: National Savings Certificate

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