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Wednesday, December 5, 2012

Make Savings ~ Invest in National Savings Certificates (NSC)

National Savings Certificates (NSC)

Savings benefit mankind……. ~ it is advised that one should start with Savings – they would say that the ‘first expenditure should start with Savings’ – it is not an oxymoron : ‘try doing this, upon receiving your salary every month, first keep 10% of that aside, better invest it in some savings – say Recurring deposit or some approved savings schemes.

For those in search of security, Post Office offers the best environ and National Savings Certificate, perhaps the best scheme.  There have been some series of NSC, which is a scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. Trust and HUF cannot invest in this.   Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act. The other incentive is that Certificates can be kept as collateral security to get loan from banks.

The Government Savings Certificates originated from the The Govt Savings Certificates Act – Act no. 46 of 1959.  Initially, the amount used to double in Six years; later an amount of Rs.1000/- invested  used to become Rs.1601/-  upon maturity in 5 years.  Effective, Dec 2011, understand that the prevailing interest rate is 8.4% which is compounded half yearly and amount of Rs.1000/- now becomes Rs.1523.50  after 5 years.

NSCs can be obtained through Postal agents or directly from Post Office in your locality.  Payments can be made in cash, cheque or DD or by raising a debit in the savings account held by the purchaser in the Post Office.

Understand that last year during Nov. 2011, 10-Year National Savings Certificate was launched.  In accordance with the decisions taken by the Government on the basis of the recommendations of the Committee for Comprehensive Review of National Small Savings Fund (NSSF), headed by Smt Shyamala Gopinath, the then Deputy Governor, Reserve Bank of India, Notification for launch of new savings instrument, namely 10-Year National Savings Certificate (IX-Issue), 2011, was issued  on  29th November, 2011.  The major highlights of this scheme are as follows:

o        Investments in Certificate will earn Interest at the rate of 8.7% p.a. compounded semi-annually.
o        On investment of Rs. 100, the depositor will get Rs. 234.35 on maturity of the Certificate.
o        This Certificate will be available in the denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000 and Rs. 10,000. 
o        There is no upper limit for investment in the Certificate. 
o        This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.
With regards – S. Sampathkumar.

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