As per Indian Income Tax Act, National Saving Certificate is most popular scheme for tax saving purpose for individuals. Relating to National Saving Certificate, we would like to clarify the following points:-
Q. What is National Saving Certificate (NSC)?
Ans. National Saving Certificate is a tax saving scheme governed by the Government of India.
Q. Who can purchase National Saving Certificates?
Ans.. Any adult individual can purchase National Saving Certificates in single name or jointly. Parents also can purchase National Saving Certificates on behalf of their minors. Hindu Undivided Family (HUF) can also invest in these Certificates.
Q. Where can I apply for National Saving Certificates?
Ans. You can apply for National Saving Certificates with all post offices which are authorized to transact saving bank business.
Q. Is nomination facility available in National Saving Certificates?
Ans. Yes, all individuals can avail the facility of nomination except in case of certificates purchased in name of minor.
Q. What is the minimum amount of investment in National Saving Certificate?
Ans. Rs.100/= is the minimum amount to be invested in National Saving Certificate. National Saving Certificates are available in the denominations of Rs.100, Rs.500, Rs.1000, Rs.5000 and Rs.10000.
Q Is interest of National Saving Certificate received regularly?
Ans. No, the interest in investment in National Saving Certificate is not received regularly. It is re-invested. The total amount of interest is received only at the time of maturity.
Q. Is the interest received on National Saving Certificate, exempted from Income Tax?
Ans. No, the interest received on National Saving Certificate is not tax free. It is taxable. It is added every year on accrual basis in the income of tax payee.
Q. What is the tax benefit of investment in National Saving Certificates?
A. Amount invested in National Saving Certificates along with PPF/LIC/ULIP etc. is eligible for deduction under section 80-C up to a maximum amount of Rs.150000/= for financial year 2014-15 (A.Y.2015.16) and financial year 2015-16 (Assessment Year 2016-17).
Q. What is the maturity period of National Saving Certificate?
Ans. Maturity period differs from the point of Issue Number and date of the Certificates. At present latest issue is called as ‘NATIONAL SAVING CERTIFICATES (NSC) IX ISSUE’. These certificates shall mature after 10 years from the date of certificate. With effect from 01.12.2011, these certificates are issued.
Q. What is the maximum limit for investment in National Saving Certificates?
Ans. You can invest any amount in National Saving Certificates but to avail the tax benefits the maximum amount of Rs.150000/= shall be considered under section 80C.
Q. What about the amount of interest which is re-invested in National Saving Certificates?
Ans. Any accrued interest which is re-invested automatically in National Saving Schemes, is also qualified for deduction under section 80C.
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