What is National Savings Certificate?
National Savings Certificate is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public. National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while (i) Investing, (ii) during the life and (iii) at the time of maturity of the Investment.
Benifits of National Savings Certificate
1) The National Savings Certificate (NSC) is eligible for tax deduction under Section 80C for an investment of up to Rs 1 lakh. One can invest in five- or 10-year NSCs.
2) The interest on the NSC is fixed in April every year. The current rate is 8.5% for five years, and 8.8% for 10 years.
3) The interest accumulated every year can be deducted from Rs 1 lakh investible in that year for saving tax, as it is considered to be invested for this purpose.
4) The interest is taxable, but since it can be reinvested as part of Section 80C investment, it makes NSC an attractive option.
5) Investors have to keep an account of the interest received each year and ensure that the overall investment, including the interest, is in the Rs 1 lakh limit.
National Savings Certificate and Benifits
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