National Savings Certificate for Tax reduction
National Savings Certificate (NSC) is one of the oldest forms of savings. In the earlier period NSC played an important role in savings. But in recent day’s introduction of equity, mutual fund, united linked insurance and fixed maturity plans decreased the demand for NSC. But, those who looking for tax discount can choose this NSC. National Saving Certificate issued by department of post and government of India. So that NSC ensures 100% security on their certificates.
The minimum deposit rate in NSC is 100 rupees, and the minimum period is fixed to six years. In various denominations like 1000, 5000, 10000 NSC is available. A person can deposit any amount in NSC. Those who invest less than one lakh will get reduction in paying tax interest. 8% is the present interest rate of NSC. When the investment reaches half year, the interest rate will be calculated on the basis compound interest. Interest amount of each year will be given back to investors with the invested amount after completing six years. This means, if we invested 10000 rupees, we will get it back as 16010 rupees after six years.
An individual person or two parties can buy NSC certificate. Parents can also invest in NSC in the name of their children’s. NSC certificate cannot provide for companies, societies and other firms, and also NRI’s and HUF’s cannot invest in NSC. Each year’s interest can deposit in to the account. Investors will get reduction in paying tax for the interest amount which is earned from the investment. If we do not withdraw the investment amount even though it reaches maturity period, it will get Post Office savings account Interest for two years. The facility for reinvestment is also available in NSC.
The NSC certificate is also used as security for taking loans from Banks and Government Institutions. NSC certificate can encase through banks. This facility is also available in every post office in India. They can withdraw the money without reaching maturity period. The facility to transfer NSC certificate from one post office to another is also available. The NSC certificate can also transfer from one person to another before it reaches maturity period. If the original copy of the NSC certificate losses or destroyed then we can apply for the duplicate one. The person who keeps the power of attorney can also make buying and selling of NSC.
NSC is the one of the best method for saving taxes. It is qualified for rebate according to the section 80c of Income tax category. But the interest amount is liable for tax