Saving Schemes: National savings certificate

National savings certificate

NSC is an assured return scheme and provides for tax rebates under section 88. Interest is payable at 8 per cent for a duration of six years, which is relatively lower compared to other small saving schemes. Here, investors are required to make a single deposit and the interest compounded is returned along with the principal amount on maturity.

However, NSC suffers on account of liquidity, as premature withdrawals can be done under specific circumstances only, such as death of the holder(s), forfeiture by the pledgee or under court's order. Like PPF, NSCs are not suitable for those who yearn for regular income and are basically for those looking at safe long-term investments.

NSC investors enjoy tax benefits under section 88. Interest is eligible for deduction under section 80L upto a maximum limit of Rs 12,000. Also, the accrued interest is automatically reinvested, and qualifies for benefit under section 88.

Thus, NSC is an ideal vehicle for those investors who are looking at tax benefits on a longer-term basis and are not too bothered about liquidity.

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