Interest Rates - The certificates earn an annual fixed interest of 7.9% pa that gets revised every quarter by the government.
Maturity Period - Though the scheme had two types of certificates earlier for a five-year and ten-year tenure, the latter got discontinued in December 2015. That means only NSC’ for five years are now available for subscription.
Tax-saving investment - The principal invested in NSC qualifies for tax-savings up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961. As it is a government-backed saving scheme, the NSC offers beneficial tax saving options for investors. You can use the NSC calculator/NSC tax-exemption calculator to find out your tax savings. The NSC calculator/NSC tax-exemption calculator is easy to use and deducts the requisite amount of your investment from the total income. You can also calculate your interest or maturity amounts using the other types of NSC calculators.
Investment flexibility - There is no minimum or maximum limit for investing in NSCs, and you can start from as little as Rs.100. The flexibility of the initial investment amount makes it a coveted investment instrument for most investors.
Accessibility - The fact that the National Savings Certificate can get easily bought from any post office or bank on submission of the required KYC documents makes it an extremely accessible investment option
. The method of transferring the certificate from one PO to the other or one person to another is also smooth as it does not impact the interest accrual/maturity of the original certificate.
Loan collateral - NSC certificates also get accepted as collateral or security for secured loans by most banks and NBFCs. After stamping the certificate, it gets transferred to the bank during loan disbursement.
Power of Compounding - The interest earned on NSCs gets compounded annually and reinvested by default. However, the amount becomes payable only at maturity.
Nomination - NSCs also provide the option of assigning a nominee. That allows any family member, including a minor, to inherit the investment in case of any unfortunate event.
Corpus on maturity - Since there is no TDS on NSC pay-outs, the entire corpus becomes available on maturity. The tax on the investment becomes payable while filing the annual income tax return or during the payment of advance tax.
Premature withdrawal - It is usually not possible to exit the scheme except under special-circumstances like the death of the investor, court order, or forfeiture by the pledgee, who is a Gazetted Government Officer.