NATIONAL SAVING CERTIFICATE of India is one the oldest and most popular form of investment in India. As many people in Indian lock their hard earned money in NSC (National Saving Certificate) for long term and lock its interest too.
Earlier their was only one version of the NSC is available in this lock in period was for 6 years and rate of interest is around 8.6% and their is no partial or full payout in available before its maturity. That mean investors will get its principle plus its interest at the time of maturity only. The money was compounding on a half yearly basis. This is totally different kind of investment if we compare it with others like fix deposits , bonds, investing in stock market etc. In that we can take our money whenever we want.
But now Post Office has introduced two version of NSC (National Saving Certificate). So this gives investors wide options to choose as per their requirement and suitability. Once investors understood these two versions then its easy to choose NSC by investors. Here are the two version of NSC and how they are different from each other.
Now their are 5 years instrument and 10 year instrument. Rate of interest on 5 year NSC is 8.6% and for 10 years of NSC rate of interest is 8.9%. As both of the NSC have different lock in period, so the rate of interest is also different as per lock in period , the more the lock in the better the interest will be and min the lock in less the interest will be. So now investors will invest either for 5 years or 10 years. Other options like payment of maturity will be the same as we have discussed on the old version of NSC (6 years).
TAX BENEFIT is the major attraction of NSC (National Saving Certificate) , the amount invested in NSC is allowed as a deduction under section 80C of the income tax and this is part of the overall Rs. 1,00,000/- limit that is present. The amount that is reinvested can be added on the deduction figure which is actually benefit for investors. But the interest earned every year from NSC is actually taxable.
So NSC (National Saving Certificate) is suitable for all those investors who want to block their money for long term and looking for some tax benefits too.
Some other features of NSC
- Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
- No maximum limit for investment.
- No Tax deduction at source.
- Certificates can be kept as collateral security to get loan from banks.
- Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
- Trust and HUF cannot invest.
Other article you might interested in reading Tips for Investing in IPO
For Investing in Indian Stock market visit link for share market tips
