Unlike fixed deposits, National Savings are specifically designed for businessmen and salaried employees. Tax benefits are one of the many benefits of National Savings Certificates.
The National Savings Certificates (NSC) offered by the Government of India are among the safest investment tools available at Indian post offices. Salary employees and businessmen can invest in these certificates to earn a fixed income. Under this scheme, individuals can invest for up to 10 years. In India, NSCs are issued in two different issues, NSC VIII Issue and NSC IX Issue. Investments in NSC (VIII Issue) and NSC (IX Issue) can be made for 5 and 10 years, respectively. In April of each year, the Government of India sets a fixed rate of interest for National Savings Certificates. NSCs purchased for five years are subject to an 8.5% interest rate and those purchased for ten years are subject to an 8.8% interest rate. The interest rates will remain fixed throughout the investment term. There is no charge for NSCs; they can be purchased individually, jointly, or on behalf of minors at all Indian post offices.
Benefits of NSCs
In addition to the aforementioned benefits, the NSC offers tax benefits as well. National Savings Certificates offer the following tax benefits:
- A taxpayer/investor can claim a tax deduction for interest earned on a National Savings Certificate since the interest is not paid directly to the account holder/investor. Section 80C of the Indian Income Tax Act allows them to claim a rebate on the interest once it is shown as income.
- NSC offers income tax rebates up to INR 1,00,000.
- Tax has not been deducted.
Salaried individuals and businessmen who are subject to income tax assessment are eligible for NSC certificate tax benefits. National Savings Certificate interest can be shown under “Interest from other sources”.
NSC tax calculation
It is possible to calculate the taxable amount of interest using a NSC Tax Calculator. In an NSC Tax Calculator, you can enter the following details: date of purchase, total NSC amount, number of years of completion after purchase, and interest rate – to determine the total interest accrued and the interest accrued in previous years. Calculate your income tax rebate based on the results shown by the calculator.
Investing in NSCs has many benefits
Government-backed National Savings Certificates offer a number of attractive benefits and are one of the safest ways of investing. Here are some of the benefits NSC offers:
- Rates of Interest: NSCs offer attractive rates of interest on your savings. There is an interest rate of up to 8.5%.
- A 5- to 10-year investment in NSC can provide investors with assured returns.
- A minimum investment of Rs.100 is allowed. The maximum investment under NSCs, however, is unlimited.
- NSC loans are available from banks against NSC certificates. Loans can be secured by National Savings Certificates.
- There are different denominations of National Savings Certificates, including Rs.100, Rs.500, Rs.1000, Rs.5000, and Rs.10,000. There is no restriction on the number of NSCs a person can purchase.
- If the certificate holder intends to transfer the NSC, the certificate can be transferred.