Tax Benefits of National Saving Certificate (NSC) | H&R Block

Tax Benefits Linked National Saving Certificate (NSC)

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Tax Benefits Linked National Saving Certificate (NSC)

national saving scheme

National Savings Certificate or NSC is a popular investment tool among government driven small savings schemes. It is also one of the lucrative investment options for availing income tax deductions u/s 80C. There are multiple benefits of making investment in NSC. Let’s have a look at them to find out why this investment scheme is popular among the masses.

Advantages of NSC

This investment avenue is available for businessmen and salaried people but HUF (previously allowed) and trust cannot avail the opportunity to invest in this scheme. NRI’s don’t have the liberty to invest in National Savings Certificate (NSC). However, if they had bought NSC before becoming an NRI then they are allowed to hold on to it. Once the NSC matures, they can also encash it to get monetary benefits. For eligible people, there is no upper limit for investment and there is no tax deduction at source on interest accrued. Adding to this, you get a decent rate of return on investment which is revised quarterly by the government. Rate of return for the second quarter of Financial Year 2016-17 is 8.10% p.a.

Liking the scheme already? Well, hold your horses, there’s more. Other than the benefits we mentioned above, there are some tax benefits also linked with this scheme. Did the phrase “tax benefits” light up your mood? I guess your answer is yes, so read on further to find out what more can you gain from NSC.

Eligible tax deductions

As we already told you that there is no upper limit for investment in this scheme, you will be happy to know that up to Rs. 1,50,000 out of your total investment in a year is eligible for tax deduction u/s 80C. The interest which accrues annually from your investment in NSC get reinvested in the scheme and is treated as fresh investment qualifying for deduction under 80C. This makes the interest tax free if you still have scope for additional investment u/s. 80C (up to 1.5L).

Enough said about the benefits of this scheme. You must be wondering now how you can invest in this scheme. Let’s find out.

Buying NSC

You can easily invest in NSC from a designated post office. All you need to do is to fill a form, pay the investment amount and submit attested copies of your identity proof and address proof. Postmaster will then verify the documents submitted by you post which he will give you the National Savings Certificate of correct amount. Sometimes, it may happen that the required certificate is unavailable. If that happens, you will be given a provisional certificate. Nothing to worry as you will get the printed NSC within few days of receiving the provisional certificate.

We hope this information was useful for you. We will continue exploring more such investment options to help you save taxes.

HRBlockIndia
HRBlockIndia
H&R Block India strives to blend tax expertise with a strong focus on continually improving the client experience to provide all its clients with an unparalleled value proposition for filing their Income Tax Online.

1 Comment

  1. Abhilasha Sharma says:

    Awesome and much useful information. Nice and detailed explanation.
    Thanks for sharing this excellent info and tweeted 🙂

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