10 Key Features You Must Know About NSC
Author: Jai Prakash
When it comes to tax saving investments, National Savings Scheme or NSC, is one of the most popular tax savings schemes in India. A look at its major features makes it evident as to why this investment is so popular in India
NSC is commonly available in post offices. This is a 5-year fixed income investment with interest fixed for the five year period. Compared to bank fixed deposits (FDs), another popular investment, NSCs typically provide higher interest rates. In case of NSC, unlike FDs, there is also no tax deduction at source (TDS).
Being a tax saving investment, annual investment upto Rs 1.5 lakh qualifies for tax deduction under Section 80C. The interest earned also qualifies for the Section 80C tax deduction. However, its maturity proceeds are taxable.
PPF vs NSC This is unlike Public Provident Fund (PPF), another popular tax saving investment, where the contribution, interest and maturity proceeds are all tax free. Of course, unlike NSC, in case of PPF, the interest rate typically gets revised and is up for review every quarter. Also, the compounding of interest for NSC is half-yearly while is it is annual for PPF.
It is worth pointing out that the tax deductions at various points of the investment i.e. contribution, interest and maturity, makes the effective interest rate much higher than fully taxable investments. You can also endorse another person’s name for NSC and can avail a loan against it from leading financial institutions.
Clearly, there are enough reasons to explain the popularity of NSC. That also provides enough reasons to visit the local post office.
