NSS - National Savings Scheme
National Savings Scheme: All You Need to Know
If you are a risk-aversive investor and looking for options to diversify your wealth with fixed-return investments, then NSCs or National Savings Certificate Schemes is the best option for you. National Savings Scheme NSS is a tax-saving investment backed by the Indian government that Indian residents can purchase at any post office. Here is a comprehensive guide on National Savings Schemes and how to invest in them.
National Savings Scheme- A Brief
To understand the NSS meaning, you should know what the National Saving Certificate Schemes are all about, their eligibility criteria, the documents you need to submit, and how investing in these schemes can diversify your portfolio and grow your wealth.
NSS is a Post Office savings product created or sponsored by a government and operated through a licensed financial institution or other entity. The National Savings Scheme has pre-determined eligibility criteria and offers different features and benefits. Therefore, it is recommended to know more about the system before you invest your hard-earned savings into them.
Key Details of NSS Schemes
Here are some of the key highlights of the National Savings Scheme NSS in a tabular format:
|National Savings Certificate – Key Highlights|
|Interest Rate||6.8% p.a.|
|Investment Amount||● Minimum: Rs. 1,000
● Maximum: No maximum limit
|Tax Benefit||Up to Rs. 1.5 lakh under Section 80C of the Income Tax Act|
National Saving Certificate Scheme Interest Rates
The interest rates of NSS are subject to periodic modifications as per the mandate issued by the Indian Finance Ministry. National Saving Certificate Scheme Interest Rate for Q3 FY 2022-23 (October-December) is 6.8%, the same as in the previous quarter (July to September 2022). Interest is compounded annually and is payable only at maturity. Let's look at some of the historic National Saving Certificate Scheme interest rates:
|Q2 FY 2022-23||6.8%|
|Q1 FY 2022-23||6.8%|
|Q4 FY 2021-22||6.8%|
|Q3 FY 2021-22||6.8%|
|Q2 FY 2021-22||6.8%|
|Q1 FY 2021-22||6.8%|
|Q4 FY 2020-21||6.8%|
|Q4 FY 2019-20||7.9%|
|Q1 FY 2018-19||7.6%|
|Q2 FY 2018-19||7.6%|
|Q3 FY 2018-19||8.0%|
|Q4 FY 2018-19||8.0%|
|Q1 FY 2019-20||8.0%|
|Q2 FY 2019-20||7.9%|
|Q3 FY 2019-20||7.9%|
Key Features And Characteristic Of the National Savings Scheme NSS
Here are some features of NSS:
Secure and Guaranteed Returns
Even before you invest in NSS, the interest rate will be declared, compounding every year. The fixed returns are secure, guaranteed, and not associated with market risks. This is an advantage to risk-aversive investors, and the National Saving Certificate Scheme encourages more savings.
National Savings Scheme investments benefit you from tax exemptions up to the limit of Rs. 1.50 lakhs as stated under section 80 C of the ITA Act 1961. So not only can you earn lucrative returns, but you also save taxes. You must understand that the annual interest earned by the NSS investment in the first 4 years is considered reinvested and thus is exempted from tax deductions.
You can also use this interest-earned amount for tax exemptions under Section 80C. But the same cannot be done for the interest earned in the fifth year. This amount is taxed at the applicable rate and cannot be reinvested.
National Savings Scheme NSS guarantees large, fixed, and safe returns, adjusted quarterly but paid out at the end of the term on maturity. This encourages people to save more and enhance their investment portfolio.
Type of Nss to Invest In:
Before investing in NSS, you should be careful about the type of system you select. Go through the features and benefits of the scheme available, and then invest. The two National Saving Certificate Schemes operational earlier were NSS of 5 years (NSC VIII) and NSS of 10 years (NSC IX). Now NSC IX is not operational anymore, so investors only have one option left, i.e. NSC VIII for 5 years is now available for subscription.
The main features of NPC VIII of 5 years are:
You can purchase NSS Certificates from any post office in India for 5 years after making a minimum investment of Rs. 1000 without any restriction on the upper limit.
Transfer of NSS Certificates
National Savings Scheme NSS certificates can be easily transferred without affecting the maturity or interest earned on these certificates. These can be transferred from one post office location to another or from one person to another. You simply need to follow some basic rules:
- For remittances from one post office to another, you must apply to the post office that previously issued the original.
- National Savings Certificates may also be transferred from one owner to another by completing a person-to-person Savings Certificate Transfer Application at the original Post Office of the issuer, subject to certain conditions.
Duplicate Issuance Of National Savings Scheme NSS
A duplicate certificate can be issued if the original NPC certificate is lost, stolen, damaged, defaced, or severed. Simply complete the certificate of savings duplication form and submit it to the post office that issued the NPC to be replaced. The main fields of the form are:
- Certificate details – serial number, denomination, NSC issue, etc.
- Date the certificate was purchased.
- The reason for requesting a copy should also be stated along with other details.
Premature Withdrawals of NSS certificates
NSC-VIII he has a five-year vesting period, and early exit is only allowed in some instances, such as:
- When the NSS holder dies.
- When there is a seizure by a pledgee who is a public official.
- Due to a court order
Recognised by Banks/NBFCs for Loans
National Saving Certificate Scheme is recognised by all banks and financial institutions, and they also treat your NSS certificates as valid collateral against secured loans.
In the event of the investor's sudden death, the investor may designate nominees/family members (including minors) to succeed in the National Savings Scheme NSS investment.
Types of National Deposit Certificate Holdings
The different types of holding a National Savings Certificate are:
- A Single Holder NSS Certificate may be purchased by a single person or by a guardian or parent on behalf of a minor
- Joint A NSS Certificate is held by two investors with equal earnings sharing at maturity.
- Joint B NSS Certificate is a joint holding certificate where the investors can decide to share the returns, but the maturity amount will be handed over to only one of them (the primary investor.)
Benefits Of Investing In National Savings Certificates
Below are some of the advantages of investing in National Savings Scheme Certificates:
- Investing in National Saving Certificate Scheme is nearly risk-free as it is supported by the Central Government.
- These investments offer the best returns among fixed-income products.
- Investing in NSS certificates offers flexibility to investors as the minimum investment amount is as low as Rs 1,000, and there is no upper limit.
- National Savings Scheme NSS Certificates are easily available as they are available at all post offices in India.
- The National Savings Scheme offers investment tax exemption benefits of up to INR 1.5 lakhs per year.
- These NSS certificates can also be purchased on behalf of minors.
- In the event of the investor's death, the NSS investment can be transferred to the nominee or a family member (designated by the investor).
Eligibility Criteria to Invest in National Savings Scheme
To invest in National Savings Scheme NSS, you must fulfil the below-given criteria:
- You should be a resident of India to invest in the National Saving Certificate Scheme.
- An adult can invest in her NPC individually or collectively (up to 3 adults), legal guardian on behalf of a minor/mentally disabled person, or a minor over the age of 10.
- Although NRIs are not eligible to invest in NSS certificates, there could be a situation wherein an Indian investor gets converted into an NRI before the expiration of the NSS tenure. In such cases, the National Savings Scheme certificates will be retained until expiration.
- Any organisation that is into social welfare cannot invest in National Saving Certificate Schemes.
- Trusts and Hindu Undivided Families (HUFs) also cannot invest in NSS, although Karta can invest on behalf of the entire unit.
Required Documents for Investing in National Savings Certificate
You need to submit the following documents to initiate your investment in NSS:
- You must correctly fill out the National Saving Certificate Scheme Application Form
- You must attach two recent passport-size pictures of yourself.
- Submit Proof of Identity, which can be your Aadhaar Card, PAN card, etc.
- Submit Proof of Address, which could be an Aadhaar Card, Passport, Voter ID, Utility Bills, etc.
- You must make the Cash/cheque/net banking deposit for the investment amount.
These documents can be submitted to the Indian Post Office to receive National Savings Scheme certificates of the appropriate denomination.
How To Invest In National Savings Certificates
You can invest in NSS following the offline and online methods. Here we will discuss both:
Offline Procedure to Invest in the National Savings Scheme
Step 1 – You can visit the nearest post office or your bank and fill out the NSS application form correctly with all your accurate details.
Step 2 – Keep all the above documents handy and submit a self-attested copy of the asked documentation along with the application form.
Step 3 - Pay your investment in cash or cheque.
Step 4 – After you have made the payment, you can receive your NSS certificate and collect it from the post office.
How To Invest In National Savings Scheme Online
Follow these steps for a digital application of NSS certificates:
Step 1 – Visit the official website www.nsiindia.gov.in and click on ‘Scheme Forms’
Step 2 - Select New Request and click on the NSS Account you want to invest in.
Step 3 – There will be a form, which you must accurately fill out and then submit on the portal after specifying the minimum deposit amount
Step 4 – Upload the documents that the site may ask you for
Step 5 – Make an online payment using your net banking details
Step 6 - Agree to the terms and conditions, and your application will be submitted online
Step 7 – You can view or download your deposit slip
Comparison of Different Investments under the National Saving Scheme Based on Plans
Some of the most lucrative, popular, and profitable investments that you can make under the National Savings Scheme are :
|Scheme||Interest Rate||Minimum Investment||Maximum Investment|
|Post Office Savings Account||4% p.a.||–Rs 20
–Non-cheque facility – Rs 50
|Post Office Time Deposit Account (TD)||First-year – 5.5% p.a.
The second year – 5.5% p.a.
Third Year – 5.5% p.a.
Fourth Year – 6.7% p.a.
|Rs 1000||No limit|
|Post Office Monthly Income Scheme Account (MIS)||6.6% per annum payable monthly||Rs 1,500||For a single account- Rs 4.5 lakh
Joint account accounts- Rs 9 lakh (tenure of 5 years)
|Senior Citizen Savings Scheme (SCSS)
(For Senior Citizens)
|7.4% p.a. (Compounded annually)||Rs 1,000||Maximum deposit over the lifetime allowed at Rs 15 lakh (maturity period – 5 plus 3 years)|
|15-year Public Provident Fund Account (PPF)||7.1% p.a. (Compounded annually)||Rs 500 per financial year||Rs 1.5 lakh per financial year ( 15 plus 5 years maturity period)|
|National Savings Certificates (NSC)||6.8% p.a. (Compounded annually)||Rs 100||No limit (Lock-in period of 5 or 10 years)|
|Kisan Vikas Patra (KVP)||6.9% p.a. (Compounded annually)||Rs 1,000||No limit (Lock-in period of 30 years)|
|Pradhan Mantri Vaya Vandana Yojana (PMVVY)
(For Senior Citizens)
|7.4% p.a. payable monthly
If you subscribe to a monthly pension scheme, then the interest rate increases to 7.66% p.a.
|Rs 1,000||The maximum investment limit has been changed from per family to per citizen per year. (term of 10 years)|
|Sukanya Samriddhi Accounts
(For Girl Child)
|7.6% p.a. (Compounded annually)||Rs 1,000 per financial year||Rs 1.5 lakh per financial year (tenure of 15 years)|
Comparison of Some of the Most Popular National Saving Certificate Schemes Based on Features
|Features||Post Office Monthly Income Scheme||Post Office RD Scheme||PPF||NSC|
|Joint account facility||Available||Available||Not available||Available|
|Interest rate||6.60% (Current)||5.80%||7.10%||6.80%|
|Maturity||5 years||5 and 10 years||15 years and can be extended by another 5 years||5 and 10 years|
|Premature withdrawal facility||Available||Available||Available under specific conditions||Available under specific conditions|
|Tax benefits||Not allowed||Not allowed||Allowed – Both the investment amount and the returns are exempted from tax under Section 80C.||Allowed – Tax benefits up to Rs. 1.5 lakh under Section 80C.|
The main goal of the National Saving Certificate Scheme is to mobilise savings and enable individuals to build a robust portfolio of good size. The returns on National Savings Scheme NSS are regularly modified, but centralised hedging makes them a safe investment option.
In most cases, national savings plans can be classified according to the categories of beneficiaries they are intended for. So, invest prudently, and diversify your portfolio by investing in National Savings Scheme NSS certificates.
Frequently Asked Questions
Does the NSS scheme offer tax benefits?
Most NSS schemes like SCSS, PPF, Sukanya Samriddhi Yojana, NSC, etc., are considered tax-saving investment schemes through which you can save Rs. 1.5 lakhs from your taxable income as guided by section 80C.
What are the Popular National Savings Schemes for 2022, and which comes with the best investment return?
The popular NSS Schemes are National Savings Certificate, Public Provident Fund, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana. The investments that come with high-income-generating options are Sukanya Samriddhi Yojana and Senior Citizens Savings Scheme
What is NSS Certificate Designation, and how many can be purchased by an Indian citizen?
National Savings Certificates can be issued for Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000, and Rs. 10,000. You can buy as many NSS certificates as you want.
Are the returns earned from the National Savings Scheme NSS taxable?
The interest amount earned in the first four years of your NSS investments is tax-free, but the interest amount accumulated in the last and fifth year is subject to taxation.
How many years will National Savings Scheme certificate investments take to double?
The growth or doubling of National Savings Scheme returns depends on the amount invested and the applicable interest rate.
What is the current interest rate on National Savings Scheme NSS investments in 2022?
The third quarter of 2022 (October to December) has an NSS interest rate of 6.8%.
Can I redeem National Savings Scheme NSS certificates before they expire?
National Savings Scheme NSS certificates need to be invested for 5 years. Premature withdrawal of National Savings Scheme NSS savings is only possible in the event of the sudden death of the investor or a court order in effect.
How many National Savings Scheme certificates can I buy?
There is no limitation or restriction on the number of investments you can make under the National Savings Scheme. However, the least amount of investment is Rs. 1000 in multiples of 100.