Denominations of National Saving Certificates
The NSC will be issued in the denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs. 10,000. There is not upper cap fixed for purchasing amount. NSC can be purchased for any amount by any person by submitting Form 1 in post office or through an authorized agent of the Small Savings Schemes. However, Non-resident Indians are not eligible to purchase National Saving Certificates.
Types of National Saving Certificates: 3 Types
a) Single Holder Type Certificate: A single holder certificate can be brought by an adult for himself or an adult can buy a single holder certificate on behalf of a minor.
b) Joint 'A' Type Certificates: Two adults can buy a Joint 'A' type certificates which will be payable to holders jointly or to the survivor.
c) Joint 'B' Type Certificates: Two adults can buy a Joint 'B' type certificates which will be payable to either of the holders or to the survivor.
NSC in lieu of proceeds of old certificate:
If you hold a old NSC certificate and you are entitled to encash it, you can make an application by Form 1 and submit it to post office for the issuance of a fresh certificate.
Interest Rate and Encashment on Maturity:
The interest rate is not specifically been prescribed in the circular issued by Government. However, the circular states that the maturity amount payable for 10 years National Saving Certificate is rs. 234.35 for Rs. 100 denomination and at the proportionate rate for any other denomination. By reverse calculation, the interest rate comes to 8.7% annually.
Pledging of National Saving Certificates:
The NSC can be pledged to the following authorities
- The President of India or Governor of a State in his official capacity
- The Reserve Bank of India or a Scheduled bank or a Co-operative society including a Co-operative bank.
- A Corporation or Government Company
- A local authority
In case of the minor, the parents or guardians have to certify in writing that the minor is alive and that the transfer is for the benefit of the minor.
Nominations:
Nomination can be done at the time of purchase or any time after purchase but before maturity. The only difference is, at the time of purchase, nomination can be done in Form 1 itself, whereas, nomination done after purchase has to be done in Form 2.
If the certificate denomination is less than Rs. 500 than only one nominee is allowed. In case of minor, nomination can not be applied. Cancellation or variation in nomination can be done by using Form 3 at any point of time.
Premature Encashments:
The premature encashment can be done in following conditions: a) on the death of the holder or holders; b)on forfeiture of a pledge; c) when ordered by court of law. Different rules apply for premature encashment based on the time period.
Income Tax:
Interest on National Saving Certificates shall be liable to tax under the Income Tax Act, 1961 but no tax will be deducted at the time of payment of discharge value.
About the Author
I am Prem, the founder of TheFinanceConcept. I am an Investment Advisor and a part-time blogger. I hold PG degree in MBA (Finance) and pursuing CFA. Blogging has become my passion from April 2011. I enjoy writing articles on Securities Analysis and Financial Planning.
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