National Savings Certificate (NSC) is one of the most essential savings scheme offered by the Government of India. Offering profitable returns to the customers, NSCs are a safe bet for the investors looking for risk-free investments.

NSCs are popular instruments for tax savings. They are especially designed for businessmen, government employees, individuals, and other salaried person paying tax. These are in the form of tax saving investment opportunities providing long term benefits to investors. NSCs offer tax benefits to the investors; but then, the interest earned on this instrument is taxable.

NSCs’ Salient Features

Eligibility: The applications for buying NSCs can be submitted on NC-71 by any individual, either singly or in collaboration with other adults. On behalf of a minor, the guardian of the minor can also submit the application.

Limits: The minimum amount required for purchasing NSCs is Rs. 100 and there is no limit for the maximum amount.

Maturity Period: As per the VIII issue, the period of maturity for NSCs purchased up to 30th November 2011 is six years; and for those purchased on or after 1st December 2011, the maturity period is five years. As per the IX issue, the maturity period is ten years for all NSCs.

Interest Rate: The interest earning offered on the NCSs purchased on or after 1st April 2016 is 8.10 % as per the VIII issue.

Nomination and Transferability: Both these facilities are available for the investors of NSCs. The application for variation of nomination or cancellation of nomination has to be submitted on Form NC-53. The application for transfer of the certificates from one post office to the other must be submitted on form NC-32.

Premature Encashment: The NSCs can be encashed prematurely only in the case of the NSC holder’s death and in the case of forfeiture by a pledge.

Evaluation Based on Comparison with FDs

Both NSCs and FDs are popular financial tools for investments; this is provided you have cash with you, and are on ‘save mode’ of investment. NSCs are instruments held by the government while FDs are offered by both the public as well as private banks along with other NBFCs. On the other hand, fixed deposits are the instruments that offer great benefits and as well as flexibility to customers. The schemes of deposits can be availed of by customers as per their convenience. In this case, investors hold the power of controlling the FDs’ maturity period, denomination, and premature withdrawals if any. In case of NSCs, premature withdrawals and period of maturity cannot be controlled in any way by investors. However, when it comes to maintaining safety and security of the principal amount, both the options are equally efficient.

So, if you are looking towards availing more factors of liquidity, then, you should opt for fixed deposits. For enjoying tax return benefits up to the level of NSCs, you can opt for schemes of deposit that comes with tax savers.

Way Forward

In a nutshell, NSCs are a good investment choice if you happen to be in the category of conventional investors. Go for it all by all means if you want to get assured returns on your savings along with secured tax benefits.

All the best.