What is National Savings Certificate (NSC)?

National Savings Certificate (NSC)  is a fixed income/debt long term investment option offered by The Indian Government through postal department. Being backed by the GoI, they are secured and risk free investment option which provides you with a guaranteed return. Also, the minimum investment amount is a meager Rs. 100 which is affordable by most of the people. Its maturity period is 5 years which is comparatively lesser than other small savings scheme. Investors will make a onetime deposit and interest along with principal amount will be returned on the maturity.

NSC is categorized as ‘highly secured’ in the basket of Investment options. It is an Investment that gives Tax benefit while (i) Investing, (ii) during the life as well as (iii) at the time of maturity of the Investment.

NSCs qualify for investment under Section 80C of Income Tax Act. Also interest earned from NSC qualifies under Section 80C which means that investment in NSC (principal amount) as well as interest earned on it every year, up to Rs. 1 lakh, is deductible from the income of the investor.(NO TDS)

In terms of liquidity, NSCs have a drawback that premature withdrawals are allowed only under certain circumstances. Considering various factors, NSC can be an ideal investment for those who want to safe long term investment options that give guaranteed returns; do not need liquidity and who sought for tax benefits.

Features/Characteristics of National Savings Certificate (NSC):