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National Savings Certificate (NSC)
(Updated as per new rules from 01-Dec-2011)

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Features

 

 

Returns

NSC provides an interest rate of 8.4% which is compounded half yearly.

Investment Limitation

Min Amount        Rs. 100/- and additional investment in multiples of Rs. 100/-

Max Amount       No Limit

Denominations   Rs. 100/-, 500/-, 1,000/-, 5,000/-, 10,000/-, 50,000/-

Scheme Availability

All through the year.

Mode of Operation

  • Single
  • Joint (Two or more)
  • Minor with parent/guardian
  • HUFs

Tenure of Investment

The NSCs have a maturity period of 10 years.

Premature Encashment

W.e.f. 01-Dec-2011, no premature encashment in NSC is allowed. For old NSC's, the rules is as:

If encashed prematurely, within a year of issue, then only the face value is given. If encashed after a year but before 3 years, then simple interest on the face value, at the rate applicable from time to time, will be paid. The difference between the accrued interest and the simple interest is the discount rate. The Government from time to time specifies the discount rate.

 
 

 

Maturity

The certificate can be encashed from the issuing post office on the due date by simply discharging the certificates at the back.

Transferability

The certificates are easily transferable from one person to another through the post office. There is a nominal fee for registering the transfer.

Loans / Withdrawal

One can avail of a loan against the certificates by pledging it to the bank. The bank will have the NSC assigned in its favour and advance a percentage of upto 75% of face value plus the amount of accrued interest till the date of taking the loan.

Tax Benefits

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.

Tips for Investing

  • An useful instrument for people who invest to save tax.

Terms

 

Denominations

The certificate is issued in denominations of Rs. 100/-, 500/-, 1,000/-, 5,000/-, 10,000/- & 50,000/- and any other denomination as may be announced by the Central Government.

Eligibility for NSCs

NSCs are issued to Individuals, Joint (two or more) and Minor with Parent/Guardian.
There is a further classification when the certificate is issued to Joint holders -
Type 'A' - maturity is payable to both the holders or the survivor.
Type 'B' - maturity is payable to either or survivor.

Purchase of Certificate

Any individual or including body corporate 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.

Issue of Certificate

The issue of certificate will be subject to the realization of the cheque, payorder, DD. The date of the certificate will be the date of realization or encashment of the cheque. On request from the purchaser the Post Office will issue an identity slip along with the certificate. The identity slip shall be signed by the holder / holders and retained by them. This is to facilitate the purchaser to get a duplicate certificate from loss of the same and also to ensure a smooth encashment of the certificate on maturity.

 

Duplicate Certificate

A duplicate certificate is issued to the holder by the Post Office if he / she reports a loss of the certificate arising out of theft, mutilation, defacement. If the application is made to any other Post Office other than the issuing Post Office, the Post Office will forward the application to the originating Post Office. The application will have the details of the certificate number, amount, date of purchase / maturity etc. and the circumstances resulting in the loss of the certificate. In such case the identity slip comes handy for a duplicate certificate. Upon satisfactory verification of the supporting the Post Office will issue a duplicate certificate. The holder will have to furnish an indemnity bond / declaration / bank verification on demand by the Post Office as a fulfillment condition for a issue of a duplicate certificate.

 

Nomination

The single holder or joint holders of a certificate as the case may be, may, by filing in necessary particulars at the time of purchasing the certificate, nominate any person who, in the event of death of the single holder or both the joint holders, as the case may be, shall become entitled to the certificate and to the payment of amount due thereon. If such nomination is not made at the time of purchasing the certificate, it may be made by the single holder, the joint holders or the surviving joint holder, as the case may be, at any time after the purchase of the certificate but before its maturity, by means of an application to the Postmaster of the office at which the certificate stands registered. Only one nominee is allowed for a certificate which is below Rs. 500/-. Nomination facility is not allowed for or on behalf of minor. A nomination made by the holder or holders of a certificate can be changed or cancelled by submitting an application affixing a revenue stamps of the value of Rs. 1/- on every application made with the certificate to the postmaster of the Post Office at which the certificate was purchased. However a separate application for registering a nomination or cancellation must be made for certificates purchased on different dates. There is no fee for any nomination made for the first time. The nomination or the cancellation of a nomination or the variation of a nomination shall be effective from the date it is registered in the Post Office, which shall be noted on the certificate. If any nomination is not registered at the time of purchasing the certificate, it may be made by the single holder, the joint holders or the surviving joint holder, as the case may be, at any time after the purchase of the certificate but before its maturity, by means of an application to the Postmaster of the office at which the certificate stands registered. The clause that the money arising out of the maturity proceeds may be paid to the nominee mentioned in the certificate in the event of death of a single / joint holders or surviving joint holder has to be incorporated at the time of purchasing the certificate.

Encashment

NSCs are encashable only at the issuing Post Office. In the event of the certificate being presented for encashment at any other Post Office the paying Post Office will insist on the identity slip issued to the holder at the time of purchase which should be provided.

 

 

Transfer from one Post Office to another

A certificate may be transferred from one Post Office from where it was purchased to any other Post Office from the holder or holders by making an application in the form laid down by the Director General Posts at either of the two Post Offices. The application shall be signed by the holder or holders provided that in the case of joint type certificate, the application may be signed by one of the holders if the other is dead.

Transfer from one person to another

A certificate may be transferred from one person to another on consent in writing of an application to the officer of the Post Office as specified below -

  • The transfer of cases in which transfer can be sanctioned by Head Postmaster or Sub Postmaster of the Post Office where the certificate was issued.
  • From an employer to an employee on whose behalf it was purchased.
  • From a Co-operative Bank / Society, the Reserve Bank of India or a Scheduled Bank to its client / member or from a Gazetted Government Officer or from a local authority to a person or body or fund on whose behalf the certificate is held, when the certificate was not issued in the name of such person or body or fund.
  • From the name of a deceased holder to his heir.
  • From a holder to a court of law or to any other person under the orders of a court of law.
  • From a single holder to joint holders.
  • From joint holders to the name of one of the joint holders or surviving holder.

An authorised Postmaster shall give his consent to the transfer of a certificate only if the following conditions are satisfied, namely :

1.       The transfer of the certificate is effected after its completion of one year from the date of issue of the certificate or where the transfer is effected before this period.

2.       Transfer is to a natural relative or is out of natural love and affection.

Marking a LIEN

On an application being made in the prescribed form by the transferer and the transferee, the Postmaster of the office of the registration may, at any time, permit the transfer of any certificate as security to -

  • the President of India or Governor of a State in his official capacity
  • the Reserve Bank of India or a scheduled bank or a comparative society including a cooperative bank
  • a corporation of a Government company and
  • a local authority

When any certificate is transferred as security, the NSCs stand as security and is assigned in favour of the body which is advancing, the Postmaster of the office of the registration shall make the following endorsement on the certificate, namely -

" Transferred as security to . "
Lien Marked in favour of -------------------------------

The transferee of a certificate under this rule shall, until it is re-assigned under sub-rule (4), be deemed to be the holder of the certificate.


A certificate transferred under sub-rule(2), may, on the written authority of the pledgee, be re-assigned with the previous sanction in writing of the authorised Postmaster and when any such re-transfer is made, the Postmaster of the office of registration shall make the following endorsement on the certificate, namely -

" Re-transferred to . "
LIEN REMOVED------------------------------

 
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