NSC is an assured return scheme and provides for tax saving too! Returns are at 8% for a duration of only 6 years, which is relatively smaller compared to other small saving schemes. Here, investors are required to make a single deposit and the interest is returned along with the principal amount on maturity.

However, NSC is not at all liquid, as premature withdrawals can be done under specific circumstances only, such as death of the holder, forfeit by the pledgee or under court's order. 

NSC investors enjoy tax saving benefits. The interest earner is eligible for tax saving up to a maximum limit of Rs 12,000. 

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

How do I invest in National Savings Schemes?

NSC application forms are available at all post-offices.

What is the minimum investment and range of investment in NSC?

NSCs are issued in denominations of Rs.100, Rs.500, Rs.1,000, Rs.5,000 and Rs.10,000. There is no upper limit on investment in NSCs.

• Minimum investment Rs. 500/- No maximum limit.
• Rate of interest 8% compounded half yearly.
• Rs. 1000/- grow to Rs. 1601/- in six years.
• Two adults, Individuals, and minor through guardian can purchase.
• Companies, Trusts, Societies and any other Institutions not eligible to purchase.
• Non-resident Indian/HUF can not purchase.
• No pre-mature encashment.
• Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years under section 80 C of Income Tax Act.
• Maturity proceeds not drawn are eligible to Post Office Savings account interest for a maximum period of two years.
• Facility of reinvestment on maturity.
• Certificate can be pledged as security against a loan to banks/ Govt. Institutions.
• Facility of encashment of certificates through banks.
• Certificates are encashable any Post office in India before maturity by way of transfer to desired post office.
• Certificates are transferable from one Post office to any Post office.
• Certificates are transferable from one person to another person before maturity.
• Duplicate Certificate can be issued for lost, stolen, destroyed, mutilated or defaced certificate.
• Nomination facility available.
• Facility of purchase/payment to the holder of Power of attorney.
• Tax Saving instrument - Rebate admissible under section 80 C of Income Tax Act.
• Interest income is taxable but no TDS
• Deposits are exempt from Wealth tax.

DIVIDEND

GENERAL

NEW FUND LAUNCH

DIVIDEND

GENERAL

DIVIDEND

Do consider opening a PPF account if you do not have one. You can put in as little as Rs 500 a year to keep it going.

The Public Provident Fund is the darling of all tax saving investments.No wonder! You invest in it and you get a deduction on your income. Besides, the interest you earn on it is tax-free. Since it is a scheme run by the Government of India, it is also totally safe. You can be sure no one is going to run away with your money. Here, we summarise the scheme, tell you how to open a PPF account and what to expect.

1 . To open a PPF account, drop  by a State Bank of India branch. SBI's subsidiary banks can also open accounts. Alist of these subsidiary banks is available on the bank's Web site.You can even visit the nationalised bank in your neighbourhood. Selected branches of nationalised banks can also open accounts.The head post office or selection grade sub-post offices also open PPF accounts.

2. You will have to fill up a form. You can take a look or download the form from SBI's web site. Along with the form, attach a photograph and submit your Permanent Account Number. If you do not have a PAN, then furnish an attested copy of either your ration card, voter's identity card or passport. When you open an account, you will be given a passbook (just like a bank pass book) in which all subscriptions, interest accrued, withdrawals and loans are recorded.

3. You can have only one PPF account in your name. If, at any point, it is detected that you have two accounts, the second account you have opened will be closed, and you will be refunded only the principal amount, not the interest.

4. You cannot open a joint account with another individual. The account can only be opened in one person's name. You are free to nominate one or more individuals. On the death of the account holder, nominees cannot keep the account going by making contributions. If there are no nominees, the legal heirs get the money. You can open one account for yourself and others for your child/ children. But, on your death, your children cannot make any additional contributions.

5. The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000. The interest you will earn is 8% per annum.

Let's say you open an account for your minor child. You can deposit Rs 70,000 in your account and Rs 70,000 in your child's account. In this case you can in my opinion take the maximum benefit of Rs. 1,00,000/- U/s. 80C.  As Limit of Maximum Investment in a year of 70000/- is fixed by Public provident Fund Act not by Income Tax law.

You can make up to 12 deposits in one year. You don't have to put in this money at one go.

6. The PPF account is valid for 15 years. The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account. So, if you opened it in FY 2006-07 (this financial year), you will be able to withdraw it 15 years later, starting March 31, 2007 (end of this financial year). That means your PPF matures on April 1, 2022. It can be extended for a period of five years after that. During these five years, you earn the rate of interest and can also make fresh deposits. Once your account expires, you can open a new one. The only limitation is that you cannot withdraw it until seven years are completed, after which 50% of your deposits can be withdrawn, if needed.

• The Public Provident Fund Scheme is a statutory scheme of the Central
  Government of India.
• The Scheme is for 15 years.
• The rate of interest is 8% compounded annually.
• The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year.
• One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
• The deposit can be in lumpsum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.70,000/-.
• It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders.
• The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity.
• The discontinued account can be activated by payment of minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.
• Account can be opened by an individual or a minor through the guardian.
• Joint account is not permissible.
• Those who are contributing to GPF Fund or EDF account can also open a PPF account.
• A Power of attorney holder can neither open or operate a PPF account.
• The grand father/mother cannot open a PPF behalf of their minor
  grand son/daughter.
• The deposits shall be in multiple of Rs.5/- subject to minimum amount of Rs.500/-.
• The deposit in a minor account is clubbed with the deposit of the account of the Guardian for the limit of Rs.70,000/-.
• No age is prescribed for opening a PPF account.
• Interest is not contractual but rate is notified by Ministry of Finance, Govt. of India, at the end of each year.
• The facility of first withdrawal in the 7th year of the account subject to a limit of 50% of the amount at credit preceding three year balance. Thereafter one Withdrawal in every year is permissible.
• Pre-mature closure of a PPF Account is not permissible except in case of death.
• Nominee/legal heir of PPF Account holder on death of the account holder can not continue the account, but account had to be closed.
• The account holder has an option to extend the PPF account for any period in a block of 5 years on each time.
• The account holder can retain the account after maturity for any period without making any further deposits. The balance in the account will continue to earn interest at normal rate as admissible on PPF account till the account is closed.
• One withdrawal in each financial year is also admissible in such account.
• The PPF scheme is operated through Post Office and Nationalized banks.
• PPF account can be opened either in Post Office or in a Bank.
• Account is transferable from one Post office to another and from Post office to Bank and from Bank to Post office.
• Account is transferable from one Bank to another bank as well as within the bank to any branch.
• Deposits in PPF qualify for rebate under section 80-C of Income Tax Act.
• The interest on deposits is totally tax free.
• Deposits are exempt from wealth tax.
• The balance amount in PPF in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.
• Nomination facility available.
• Best for long term investment.

Labels: post office, ppf