National Savings Certificate
The National Savings Certificate (NSC), a fixed-income investment plan offered by the Government of India, is simple to open at any post office. The National Savings Certificate is a savings bond programme designed to encourage investors, mainly those with modest to moderate incomes, to make investments and take advantage of Section 80C income tax benefits.
National Savings Certificate Interest Rate
The government guarantees a consistent income for the investor by revising the yearly fixed interest rate on the certificates every quarter. There is no maximum amount that you may invest; you can start with as little as Rs. 100. The interest collected is reinvested by default and compounded yearly; payment is due only at maturity.
In essence, the National Savings Certificate is a savings plan that the government has pushed for Indian individuals.
Key Points:
- The principle invested in NSC is eligible for tax savings under Section 80C of the Income Tax Act, up to Rs. 1.5 lakhs yearly, as it is a government-backed tax-saving programme.
- Banks and NBFCs accept NSC certificates as security or collateral for secured loans. When distributing loans in this situation, a transfer stamp is applied to the certificate and sent to the bank.
- At maturity, the investor will get the whole corpus value. The subscriber should pay the relevant tax while submitting his income tax returns or paying his advance tax because there is no TDS on NSC payouts.
- Like Post Office FDs and the Public Provident Fund, among other fixed income products, the NSC offers total capital protection and guaranteed interest. However, unlike tax-saving mutual funds and national pension systems, they are unable to produce returns that outpace inflation.
The National Savings Certificate are issued by which bank
Once the necessary KYC documentation is submitted, purchasing it from any post office is simple. Furthermore, the certificate may be easily transferred across POs and between individuals without affecting the original certificate’s interest accrual or maturity.
Eligibility Criteria for National Savings Certificate
- The person has to be a citizen of India. It is not possible for non-resident Indians (NRIs) to invest in NSC.
- There is no minimum age requirement for anyone to acquire a certificate.
- Investment in NSC is not permitted for Hindu Undivided Families (HUFs), Trusts, or Private or Public Limited Companies.
Child Saving Plans in India: Secure Future
Child Saving Plans in India: Childhood is a time of innocence and wonder, but it also ushers in responsibility for parents. It is a universal aspiration to ensure that their children have secure futures. In India due to the heterogeneous and rapidly changing socioeconomic environment, parents usually look for dependable financial tools that can ensure their children’s future. One such direction increasing in popularity is Child Saving Plans. This financial instrument is created specially for Indian Parents, so they can help their children realize dreams and aspirations.
Understanding Child Saving Plans in India
A Child Saving Plan is a long-term investment and insurance product, in particular, tailor-made to meet the monetary dreams associated with an infant’s schooling, marriage, and higher education. These plans serve as a disciplined technique to put together decent sums for the future, offering a combination of coverage and good returns. In India, where the price of schooling and other critical prices are ever increasing, these plans offer a strategic way to build up funds over time.
Different types of Child Saving Plans
- Traditional Child Saving Plans:
These plans have a potential to offer fixed returns at a comparatively lower risk. Here, the money is invested in fixed-income instruments providing stability. These have lower return when compared to other market-linked plans.
| Name of the Plan | Name of the Company | Eligibility Criteria |
| LIC Jeevan Tarun | Life Insurance Corporation of India | Minimum age of child: 90 days; Maximum age of child: 12 years |
| SBI Life Smart Champ Insurance Plan | SBI Life Insurance Company Limited | Minimum age of child: 30 days; Maximum age of child: 13 years |
| HDFC Life YoungStar Udaan | HDFC Life Insurance Company Limited | Minimum age of child: 30 days; Maximum age of child: 60 years |
- Endowment Plan:
The endowment plan provides insurance and savings too. These plans have set periods of time and at the end of tenure or if policy holder dies then they provide a sum altogether. The above received on maturity can be used by the policy holder as per his/ her requirements for any of her/ his child’s financial needs- it may be education, marriage etc.
| Name of the Plan | Name of the Company | Eligibility Criteria |
| LIC New Endowment Plan | Life Insurance Corporation of India | Minimum age: 8 years; Maximum age: 55 years |
| ICICI Pru Cash Advantage | ICICI Prudential Life Insurance Company Limited | Minimum age: 0 years; Maximum age: 60 years |
| HDFC Life Sanchay Plus | HDFC Life Insurance Company Limited | Minimum age: 30 days; Maximum age: 60 years |
- Unit-linked Plan:
Unit-linked plan is a product of insurance coverage and market linked investment. This plan incurs greater risk since the returns depend on how well chosen funds perform. This plan is ideal for those who are willing to take the market risks and aim at high returns. As this is a market-based plan, it becomes volatile.
| Name of the Plan | Name of the Company | Eligibility Criteria |
| ICICI Pru Wealth Builder II | ICICI Prudential Life Insurance Company Limited | Minimum age: 0 years; Maximum age: 65 years |
| SBI Life Smart Champ Insurance Plan | SBI Life Insurance Company Limited | Minimum age: 18 years; Maximum age: 50 years |
| HDFC Life Click 2 Wealth | HDFC Life Insurance Company Limited | Minimum age: 0 years; Maximum age: 65 years |
- Child Education Plan:
Child education plan is fully dedicated to financing the needs of a child’s education. Their primary purpose is to ensure that financial limitations do not impede a child’s academic life. These plans generally offer regular pay-outs during critical educational milestones of your children. Some popular and profitable ones are-
| Name of the Plan | Name of the Company | Eligibility Criteria |
| ICICI Pru Smart Kid Regular Premium | ICICI Prudential Life Insurance Company Limited | Minimum age of child: 0 years; Maximum age of child: 17 years |
| SBI Life Smart Scholar | SBI Life Insurance Company Limited | Minimum age of child: 2 years; Maximum age of child: 17 |
| HDFC Life YoungStar Super Premium | HDFC Life Insurance Company Limited | Minimum age of child: 30 days; Maximum age of child: 60 years |
Challenges and Considerations
- Inflation: One of the challenges in long-term savings plan is considering the impact of inflation on the sum invested. As the cost of living increases, the purchasing power of savings decreases. It is important to consider inflation when determining the amount of premium and sum assured.
- Market Risks: The unit-linked child savings plans are exposed to market risks. While they are appealing due to high returns, the value of investments may fluctuate due to volatility in the financial market. Parents should calculate the risk tolerance and investment range before choosing such policies.
- Policy Terms and Premiums: Choosing the right duration and premium pay-out is important. Parents should align the timing of the plan with when the child is likely to need the financial assistance, such as higher education or marriage. In addition to that, choosing the right amount of premium, the one that fits in your budget, shall ensure consistent contribution.
- Policy Customization: It is important to carefully tailor a plan based on the child’s unique needs and wishes. For example, if the primary goal is higher education, parents can opt for plans that include periodic payments along the child’s educational journey.
- Claim Settlement Ratio: Before choosing an insurance provider, parents should research the company’s settlement rate. A high ratio indicates that claims are settled timely, reassuring parents of financial benefits when needed.
Child saving plans are a great way to secure a child’s future. They act as a shield for the kid and the family, ensuring that the kid’s future economic needs are not compromised. These plans encourage disciplined savings by offering an established technique to making an investment.
Under Section 80C and Section 10(14) of the Income Tax Act, premiums paid towards such Child Saving Plans are eligible for tax deductions. With an investment angle, the returns generated from the invested amount prove to be valuable contributions to accomplishing child’s financial needs. These returns can be in the guise of bonuses, market-linked returns, or a mixture of both.