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NSC – Eligibility, Interest Rate & Benefits


The National Savings Certificate (NSC) is a robust financial instrument initiated by the Government of India. This fixed-income investment, widely available through post offices, is a stable and secure avenue for wealth accumulation.

In our detailed article, we decode NSC’s diverse features and benefits, offering you valuable insights to make informed and strategic financial choices tailored to your investment goals. Get better at financial planning by exploring all your options better.

What is NSC?

The National Savings Certificate (NSC) stands as a secure fixed-income investment accessible through any post office branch, courtesy of the Government of India. Tailored for small to mid-income investors, NSC facilitates savings and offers income tax benefits. Here are key details:

  • Interest Rate: 7.7% per annum
  • Minimum Investment: Rs.1,000
  • Lock-in Period: 5 years
  • Risk Profile: Low-risk
  • Tax Benefit: Eligible for deductions up to Rs.1.5 lakh under Section 80C.

Investors can open NSC accounts individually, for minors, or jointly with another adult. The scheme boasts a five-year fixed maturity period, and there is no maximum limit on the purchase of NSCs. Discover the secure and tax-efficient investment landscape with NSC, contributing to both financial growth and tax savings.

Latest Updates

  1. In accordance with a government circular dated March 31, 2023, the interest rates for the National Savings Certificate (NSC) scheme have witnessed an increase. The revised interest rate, effective for the quarter spanning April 2023 to June 2023, has been set at 7.7%. Notably, this adjustment does not impact the interest rate applicable to the Public Provident Fund (PPF) scheme, which remains unchanged.
  2. As of April 3, 2023, the interest rate for NSC investments has experienced a significant hike, reaching 7.7%. This adjustment, reflecting a 0.7% increase from the previous rate of 7%, is applicable to NSC investments made during the initial quarter of 2023. The new rate came into effect on December 30, 2022, marking a positive development for individuals investing in the NSC scheme during this period.

Should You Invest in an NSC?

Investing in the National Savings Certificate (NSC) is a prudent choice for those seeking a secure avenue with tax-saving benefits. This fixed-income scheme, backed by the Government of India, offers guaranteed interest and ensures complete capital protection. However, it’s crucial to understand that, like many fixed-income options, NSC may not deliver returns that outpace inflation, especially when compared to dynamic investment tools like tax-saving mutual funds or the National Pension System.

NSC, primarily promoted as an individual savings scheme, caters exclusively to Indian residents. Hindu Undivided Families (HUFs), trusts, and non-resident Indians (NRIs) are excluded from participating in this scheme. The eligibility criteria are straightforward, requiring individuals to be Indian citizens, with no specified age limitations for certificate purchase.

By choosing NSC, investors can benefit from its reliability, enjoying tax efficiency and a secure investment environment. The scheme’s emphasis on individual Indian residents aligns with its purpose as a savings avenue for the general populace. It stands out as an option that assures steady returns while maintaining the safety of invested capital.

Eligibility for NSC

The eligibility criteria for NSC is straightforward and simple:

  1. The NSC scheme is open exclusively to Indian citizens. It provides an opportunity for residents of India to engage in a government-backed savings initiative.
  2. No specific age restrictions are imposed on individuals looking to invest in the NSC. This inclusive policy allows investors of all ages to participate in the scheme.
  3. The NSC is not available for Non-Resident Indians (NRIs) or Hindu Undivided Families (HUFs). This exclusion aligns with the scheme’s focus on individual Indian residents.

Benefits of NSC

The National Savings Certificate (NSC) stands as a reliable investment choice with various features and benefits:

  • Fixed Income: Currently offering a guaranteed return at 7.7%, NSC outperforms many FDs in terms of returns.
  • Types: Originally having two types, NSC VIII Issue remains open for subscription, while NSC IX Issue was discontinued in December 2015.
  • Tax Saver: Enjoy tax benefits under Section 80C of the Income Tax Act, with a claim limit of up to Rs.1.5 lakh.
  • Start Small: Initiate investments with as little as Rs.1,000, allowing flexibility for increasing amounts later.
  • Interest Rate: The current interest rate is 7.7% p.a. (Q1 FY 2023-24), compounded annually and payable at maturity.
  • Maturity Period: NSC has a fixed maturity period of five years.
  • Access: Easily purchase from any post office, undergoing KYC verification. Transfer between post office branches is also convenient.
  • Loan Collateral: Accepted as collateral for secured loans by banks and NBFCs, facilitating financial flexibility.
  • Power of Compounding: Interest earned gets compounded and reinvested, although returns may not outpace inflation.
  • Nomination: Investors can nominate a family member, including a minor, ensuring smooth succession in case of the investor’s demise.
  • Corpus after Maturity: Receive the entire maturity value upon maturity, with no TDS on NSC payouts.
  • Premature Withdrawal: Generally, early exit is not allowed, except in exceptional cases like the investor’s death or a court order.

Features of NSC

  • Minimum Investments: Certificates can be purchased for a minimum amount of Rs.100, with various denominations available, allowing for flexibility in investment amounts.
  • Maturity Tenure: Choose between a five-year and a ten-year maturity period, offering flexibility based on individual preferences and financial goals.
  • Rate of Interest: The current interest rate stands at 7.7%, compounded annually. However, interest is payable only at the maturity of the scheme.
  • Nominations: Investors can add family members, including minors, as nominees. In the event of the investor’s demise, the nominee inherits the scheme.
  • Types of NSC: Originally, the NSC had two types – NSC IX Issue and NSC VIII Issue. The NSC IX Issue was discontinued in December 2015, leaving only the NSC VIII Issue available.
  • Loans Against NSC: NSC can be used as collateral for bank loans. However, transfer authorisation from the postmaster is required.
  • Purchase Process: The scheme can be purchased at post offices by submitting the necessary documents.
  • Transfer of Certificate: Transfer is possible between post offices and from one individual to another. The certificate remains the same, with the new owner’s name added.

Tax Benefits of NSC

There are quite a few tax benefits after investing in an NSC:

  • Investment Limit: While there’s no upper investment limit for NSC, tax rebates under Section 80C are applicable for investments up to Rs.1.5 lakh annually.
  • Interest Earnings: The interest earned on NSC is considered part of the initial investment and qualifies for a tax break.
  • Reinvestment Assumption: The interest earned is assumed to be reinvested for the initial four years, making it eligible for a tax credit within the overall annual limit of Rs.1.5 lakh.
  • Tax Treatment in the Fifth Year: The interest earned in the fifth year is not reinvested and is taxed according to the investor’s applicable slab rate.

Documents Needed for NSC

To initiate the National Savings Certificate (NSC) purchase process, please ensure the submission of the following essential documents:

  • NSC Application Form: Kindly complete and submit the NSC application form, ensuring all relevant details are accurately provided.
  • Identification Proof: Submit an original identification proof for verification purposes. Acceptable documents include Passport, Permanent Account Number (PAN) Card, Voter ID, Driving Licence, Senior Citizen ID, or any Government-issued ID.
  • Photograph: Please attach a recent photograph of the investor along with the application.
  • Address Proof: Furnish a valid address proof to complete the documentation. Acceptable proofs include a Passport, Telephone Bill, Electricity Bill, or Bank Statement. Additionally, a cheque and either a Certificate or an ID card issued by the Post Office are required for verification purposes.

Documents Required for Encashment of NSC

To facilitate the smooth encashment of your National Savings Certificate (NSC), please ensure the submission of the following required documents:

  • Original National Savings Certificate: Submit the original NSC along with your encashment request.
  • NSC Encashment Form: Complete and submit the NSC encashment form, providing all necessary details.
  • Proof of Identity: Include a valid proof of identity with your application for verification purposes.
  • Guardian Attestation (if applicable): If the NSC was purchased on behalf of a minor, it is mandatory to provide attestation from the guardian.
  • In Case of Demise of Certificate Holder: If the certificate holder has passed away, the nominee can encash the invested amount by submitting Annexure 1 (registered at a post office) and Annexure 2 (legal evidence) forms.
  • Withdrawal Within a Year: Please note that if the amount is withdrawn within a year, no interest will be paid. Additionally, a penalty will be charged for early withdrawals.
  • Maturity Amount Payment: The maturity amount will be paid by the post office through a cheque.

Maturity and Premature Withdrawals Under National Savings Certificate

The National Savings Certificate (NSC) comes with a standard maturity period of five years, during which the invested amount typically cannot be withdrawn prematurely. Nevertheless, there are specific scenarios in which premature withdrawal is permitted under the NSC scheme. These include:

  • Demise of Certificate Holder: In the unfortunate event of the certificate holder’s demise, the invested amount can be withdrawn.
  • Forfeiture of Certificate: Premature withdrawal is allowed in cases where the certificate is forfeited, provided that the pledgee is a Gazetted Government Officer.
  • Court Order: If a court of law issues an order for withdrawal, the investor can request premature withdrawal of the invested amount.

Despite these circumstances allowing for premature withdrawal, it’s crucial to note that certain documentation is required for the process to be completed. Certificate holders seeking withdrawal must submit the necessary documents as per the guidelines outlined by the financial institution managing the NSC. This ensures a transparent and compliant procedure for the withdrawal of funds.

How Benefecial is an NSC?

Let’s take a simple comparison of NSC with other low-risk investment options in the table below:

Investment Interest Lock-in Period Risk Profile
NSC 7.7% p.a. 5 years Low-risk
ELSS funds Market-linked, historical returns show 12% to 15% p.a. 3 years Market-related risks
PPF 7.1% p.a. 15 years Low-risk
NPS Market-linked, historical returns show 8% to 10% p.a. Till retirement Market-related risks
FD 4% to 7% p.a. 5 years Low-risk

Considerations for Choosing National Savings Certificate

  • If you prioritize capital protection and are seeking tax deductions under Section 80C, NSC is a suitable option.
  • With a competitive interest rate and a relatively low-risk profile, NSC offers a stable investment avenue for a 5-year tenure.
  • Investors looking for a fixed-income option with a government-backed guarantee may find NSC appealing.
What’s Important?

  • Each investment option carries its own set of features and risks.
  • ELSS and NPS are market-linked, exposing investors to market-related risks, while PPF and FD offer lower but fixed interest rates.
  • Choosing the right investment depends on your financial goals, risk tolerance, and investment horizon.

Before making any investment decision, assessing your financial objectives and consulting with a financial advisor to ensure that the chosen investment aligns with your overall financial plan is advisable.

Requesting a Duplicate National Savings Certificate Certificate

To request a duplicate National Savings Certificate (NSC) in the event of loss, theft, damage, or mutilation, follow these steps:

  • Obtain the Duplicate Savings Certificates form from the post office that originally issued the NSC requiring replacement.
  • Fill in the necessary details on the form, including:
    • Serial numbers, denominations, and issue details of the certificate(s).
    • The purchase date of the certificates.
    • Specify the reason for requesting a duplicate certificate.
    • Provide any additional details required by the form.
  • Submit the completed Duplicate Savings Certificates form to the respective post office from which the NSC was initially issued.
  • Be prepared to provide any additional information or documentation requested by the post office to facilitate the processing of your request.
  • Once the form is submitted, the post office will process your request for a duplicate NSC.
  • Once processed, collect the duplicate NSC from the post office. It is essential to ensure that all details on the new certificate match the original.

Note: It’s advisable to report the loss or theft of the original NSC promptly and follow the prescribed procedure to minimize the risk of misuse. Additionally, adhere to any specific guidelines the post office provides for requesting a duplicate NSC.

FAQs on National Savings Certificate

As of today, you cannot subscribe to NSC online. You will be required to visit the nearest Post Office to fill out the NSC application form and submit it to the executive in order to open an NSC account.

The process is easy:

  • Visit the nearest Post Office branch and submit the duly filled NSC application form.
  • Attach self-attested copies of the documents and proofs as required by the Post Office.
  • Carry the original documents as well for verification. Make the payment of your investment in the form of cash, cheque, or demand draft.
  • Upon processing your application, an acknowledgement of the same will be provided, marking the initiation of your NSC account.

You can show the NSC interest earned under the ‘Income from Other Sources’ head in your Income Tax Return (ITR). However, NSC interest is reinvested in the first four years, and therefore, it can be claimed as a deduction under Section 80C of the Income Tax Act. The final year’s, i.e., the 5th year’s interest, is taxable as per your income tax slab.

The money you invest into NSC gets income tax deductions under Section 80C of the Income Tax Act, 1961.

  • Visit the nearest Post Office branch.
  • Fill out the application form and submit it with the necessary documents.
  • Make the payment towards the NSC account in cash, cheque, or DD. Once the processing is done, an acknowledgment for the same will be given.
  • If you have a bank or post office savings account, you can invest in the NSC electronically (e-mode). Moreover, you will require an internet banking facility for your savings bank account to invest in the NSC.

You must know that the interest on NSC is compounded every year. That is, the interest you calculate on the principal amount invested in NSC should be added to the principal amount to get the principal amount for the second year.

Upon maturity, the NSC can be encashed at any Post Office branch and not necessarily at the branch where the account is held. If you want to withdraw the money from a branch that is not your account’s home branch, you will have to apply with details, such as serial number, issue date, full name, registration and current address.

Both these government-backed schemes have been famous for years now. Though both these options come with minimal risk, they both have their own benefits and drawbacks. You can choose between the two based on your investment objectives.

NSC will take about 10 years and 4 months (approx.) to double your investment at the current interest rate of 7.7% p.a.

When you submit the application form to open the NSC account along with the KYC documents, you will have to make the payment towards the same. Once this is processed, the Post Office branch will provide you with the NSC certificate.

You have to opt for the online passbook service for the NSC account by informing the Post Office branch about it. The executives will give you the Internet banking credentials to be used. Then, you can log into the account to view all the transaction details on your NSC account. This facility is available only at selected branches of the Post Office.

Both ULIP and NSC provide income tax deductions on the principal invested in them under Section 80C.

To transfer the NSC account from one Post Office branch to another, you have to apply to the old branch or the new branch. Further, the application must have the signatures of all the account holders in the case of Joint A or B account type.

The process of filling out an NSC application form is straightforward:

  • Fill up the application form with the relevant information, such as the Post Office branch name, your savings account number held with Post Office, and the applicant’s name.
  • Paste the applicants’ photograph, and select the account you would like to open, i.e., ‘NSC VIIIth issue’ from the options.
  • Select the account holder type and account type from the available options. In the case of ‘Minor through Guardian’, fill up the details of the minor in Table 1.
  • Specify the amount you would like to deposit to open the account in figures and words. If you are providing a cheque or DD, please write the serial number and date on it.
  • Now, provide all the personal and contact details of the applicants in Table 2. All the applicants must add their signatures at the end of the page, along with their names.
  • Next, skip to the ‘Nomination’ section and enter the applicants’ and nominee’s names. In the table provided, provide details, such as the applicant’s relationship with the nominee, the nominee’s full address, Aadhaar number, and others.
  • In the case of illiterate applicants, add the signatures of two witnesses for the same along with the applicants’ signatures. That’s it!

The NSC certificate number will be provided right on the certificate. Please note this certificate number somewhere so that you can apply for a duplicate certificate by quoting this number in case your original certificate is lost/stolen.

NSC comes with a lock-in period of 5 years, i.e. it cannot be withdrawn before maturity. As an exemption, NSC can be prematurely withdrawn only in the following circumstances:

  • On the death of a single account or any or all the account holders in a joint account
  • On forfeiture by a pledgee being a Gazetted officer
  • On order by a court

The minimum amount required to open an NSC account is Rs.1,000. If you want to deposit a higher amount, you can do so in multiples of Rs.100. There is no maximum limit for the amount you deposit.

Request your bank or Post Office to provide the login credentials so that you can access your NSC account details online.

You can link Aadhaar to any Post Office Saving Scheme either online or offline. Here is how you can do it online:

  • Log on to your internet banking account using your User ID and password to access your NSC account.
  • Click on the ‘Registration of Aadhaar Number in Internet Banking’ option on the home page.
  • Enter your 12-digit Aadhaar number and click on ‘Confirm’.
  • Select the account you would like to link Aadhaar and done.

Earlier, NSC came in two variants—NSC VIII and NSC XI. The former came with a tenure of 5 years and the latter with that of 10 years. However, the latter variant is discontinued. Therefore, it is only an NSC VIII issue with a 5-year tenure that is currently available for subscription.

  • Fill in your details on Form NC41, get the signatures of the pledger and pledgee, and submit it to the Post Office branch. Attach the original certificate with the application form while submitting it to the Post Office branch. You can pledge the NSC certificate only to:
    • The President of India/Governor of the State.
    • RBI/Scheduled Bank/Co-operative Society/Co-operative Bank.
    • Corporation (public/private)/Govt. Company/Local Authority.
    • Housing finance company.
  • The PostMaster will endorse ‘Transferred Security to’ written on the certificate in red with the date and signature upon processing your application. Fees may be charged for the same.

NSC VIII issue that is currently available for subscription comes with a tenure of five years.

  • Apply for internet banking at your Post Office or bank.
  • Once it is approved, you can access your NSC account online. There will no longer be any serial numbers. Instead, an account number will be issued.
  • Since everything has been upgraded to online banking since 2016, there are fewer possibilities of you getting scammed over NSC investment.
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