Get around that taxman

Why pay that income tax? Instead invest your funds in the National Savings Certificate VII Issue. It is an ideal way to save money and at the same time reduce your tax burden. Quite an attractive option, too. Your investment nearly doubles in amount, in a period of six years.

The National Savings Certificate VII Issue is an ideal way to beat the tax payer’s claim on your income (legally of course) and at the same time it is a good short term option to save your money.

Unlike the Public Provident Fund, which does not issue any certificates for the amount deposited by you, certificates accompany investments in National Savings Certificates. Certificates are available in convenient lots of Rs.100, Rs.500, Rs.1, 000 and in bigger lots of Rs.5, 000 and even Rs.10, 000. The minimum investment is Rs.100 and there is no maximum limit.

Interest applied to National Savings Certificates is currently at the rate of 11.50 percent, compounded half-yearly and payable to you only on maturity (i.e., at the end of six years). If you invest Rs.1000, this will become Rs. 1,956 at the time of maturity.

Just like the Public Provident Fund, investment in National Savings Certificates is eligible upto Rs.60, 000 for a 20 percent rebate under section 88 of the Income Tax Act. If you are an artiste, playwright, sports person or musician then the limit is increased to Rs.70, 000 and you can get a 25 percent rebate under section 88 of the Income Tax Act. Interest up to Rs.12, 000 per annum is exempt from Income Tax under section 80-L of the Income Tax Act.

In case, you are looking at long term investments, then all you have to do is to buy National Savings Certificates every year for six years. The certificate of Year 1 will mature at the end of Year 6 and the same amount can be re-invested in Year 7. Then in Year 8 use the amount invested in Year 2 and so on.

You can use a combination of Public Provident Fund and National Savings Certificates to get a mix of both short term and long term savings.

How to Apply

National Savings Certificates can be purchased from any Head Post Offices, Sub-Post Offices and also Branch Offices. However if you want this facility to come to your doorstep, then just call your ‘friendly neighbourhood’ agent, who will promptly bring the forms to you for filling and later on even deliver the certificates.