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The National Savings Certificate (NSC) is a secure investment option provided by the Government of India through post offices. It offers reliable returns and significant tax benefits under Section 80C of the Income Tax Act, making it a popular choice among risk-averse investors.
The National Savings Certificate (NSC) is a fixed-income investment scheme that you can open with any post office branch. This is an initiative by the Government of India and encourages subscribers – mainly small to mid-income investors – to invest while saving and also saving on income tax.
A person can start investing in NSC with a minimum investment of Rs. 1,000 and with no maximum limit. However, the investment will be locked-in for 5 years i.e., it cannot be withdrawn before the completion of 5 years.
NSC – Key Information | |
Interest Rate | 7.7% per annum |
Minimum Investment | Rs.1,000 |
Lock-in Period | 5 years |
Risk Profile | Low-risk |
Tax Benefit | Up to Rs.1.5 lakh under Section 80C |
You can invest in NSC from the nearest post office in your name, for a minor or with another adult as a joint account. NSC comes with a fixed maturity period of five years. There is no maximum limit on the purchase of NSCs.
Anyone looking for a safe investment avenue to earn a steady interest while saving on taxes can choose to invest in NSC. NSC offers guaranteed interest and complete capital protection. However, like most fixed income schemes, they cannot deliver inflation-beating returns like tax-saving mutual funds and the National Pension System.
The government has promoted the National Savings Certificate as a savings scheme for individuals. Hence, Hindu Undivided Families (HUFs) and trusts cannot invest in it. Furthermore, even non-resident Indians (NRI) cannot purchase NSC certificates. The scheme is open only for individual Indian residents.
The following are the NSC eligibility conditions that must be met in order to invest in NSCs.-
NSC Interest Rates are periodically reviewed by the Ministry of Finance, leading to revisions every quarter. Interest on NSC is compounded annually and disbursed upon maturity. Below is a chart depicting the historical NSC interest rates from previous years:
Financial Year | April-June | July-September | October-December | January-March |
2023-2024 | 7.7% | 7.7% | 7.7% | 7.7% |
2022-2023 | 6.8% | 6.8% | 6.8% | 7.0% |
2021-2022 | 6.8% | 6.8% | 6.8% | 6.8% |
2020-2021 | 6.8% | 6.8% | 6.8% | 6.8% |
2019-2020 | 8.0% | 7.9% | 7.9% | 7.9% |
2018-2019 | 7.6% | 7.6% | 8.0% | 8.0% |
2017-2018 | 7.9% | 7.8% | 7.8% | 7.6% |
2016-2017 | 8.1% | 8.1% | 8.0% | 8.0% |
While there is no upper limit on the amount that can be invested in NSC, only investments of up to Rs.1.5 lakh a year can earn a subscriber a tax deduction under Section 80C of the Income Tax Act of 1961. Furthermore, the interest earned on the certificates is also added back to the initial investment and qualify for a tax break as well.
Furthermore, for the first four years, the interest gained on NSC is assumed to be reinvested (i.e. put back to the initial investment) and so eligible for a tax credit, subject to the overall annual limit of 1.5 lakh. The interest earned in the fifth year, however, is not re-invested and is thus taxed at the investor's applicable slab rate.
Previously, banks or post offices issued physical NSC certificates . This has been discontinued since 2016. At the moment, certificates can be bought either by electronic mode (e-mode) or Passbook mode.
While the passbook method is unpopular and comparatively more tedious, you can effortlessly buy an NSC scheme with a savings account at an authorised bank or post office. It is important to note, however, that you would require to activate your internet banking to do the same.
To invest in NSC offline, follow the listed steps:
Step 1: Collect the NSC application form online or at any post office.
Step 2: Fill out the form with all the details.
Step 3: Submit the form with self-attested copies of the required KYC documents.
Step 4: Take the original documents for verification and pay the amount you want to invest.
Step 5: Upon approval, collect the NSC of your application.
Step 1: Open Department of Posts (DOP) net banking and log in.
Step 2: Under 'General Services', select 'Service Requests'.
Step 3: Click on 'New Requests' and choose ‘NSC Account – Open an NSC Account (For NSC)’.
Step 4: Enter the deposit amount and choose the debit account linked to the PO savings account.
Step 5: Choose ‘Click Here’ to run through the terms and conditions. Accept them once done.
Step 6: Enter the transaction password and click on ‘Submit’.
Step 7: The deposit receipt will be there to view and download.
Step 8: Login and click on 'Accounts' to view the details of your NSC account.
Investors are required to submit:
NSC is one of the tax-saving investment options available under Section 80C of the Income Tax Act, 1961. The other popular options are Equity Linked Savings Schemes (ELSS), National Pension System (NPS), Public Provident Fund (PPF) and Tax-Saving Fixed Deposits (FD). The table below compares NSC with other tax-saving investments:
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 | 7% to 8% p.a. | 5 years | Low-risk |
Now that you have some knowledge of NSC, is this scheme for you? If you are looking for capital protection and tax deductions under Section 80C, you can consider investing in NSC.
NSC Calculator - Calculate National Savings Certificate Interest Online
You can seek a duplicate if your original NSC certificate is lost, stolen, destroyed, damaged, or mutilated.
Simply complete and return the Duplicate Savings Certificates form to the post office that issued the NSC that needs to be replaced.
The following are the form's key fields:
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 submit an application with details, such as serial number, issue date, full name, registered and current address.
When you want to encash the maturity amount, you have to carry the following documents with you:
Making investments depends on the risk appetite of the investor. One should consider all the risks and rewards associated with the investment and know enough information about the scheme. This article will provide you the relevant information about National Savings Certificate (NSC) scheme and everything one must be aware about.
Other Schemes:
National Pension Scheme
Senior Citizen Savings Scheme
Post Office Saving Scheme
Post Office Monthly Income Scheme
NSC or National Savings Certificate is a fixed-income investment scheme backed by the Government of India. The savings bond is suitable for small and medium-income investors to save tax while earning returns. This is a secure and low-risk product.
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. 5th year’s interest, is taxable as per your income tax slab.
You must know that the interest on NSC is compounded on a yearly basis. 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.
You can calculate interest using our simple and compound interest calculator.
NSC will take about 10 years and 4 months (approx.) to double your investment at the current interest rate of 7.7% p.a.
Yes, you obtain, fill up and submit the application form to open the NSC account along with the KYC documents and 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 regarding the same. 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 the select branches of the Post Office.
In order to transfer the NSC account from one Post Office branch to another, you have to submit an application at 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 NSC certificate number will be provided right on the certificate. It is recommended that you 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:
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 such that you can access your NSC account details online.
You can link Aadhaar to any Post Office Saving Schemes either online or offline. Here is how you can do it online:
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 available for subscription currently.
Step 1: Fill in your details on Form NC41, get the signatures of the pledger and pledgee, and submit it to the Post Office branch.
Step 2: Attach the original certificate with the application form while submitting it to the Post Office branch.
Step 3: You can pledge the NSC certificate only to:
Step 4: The Post Master will endorse ‘Transferred Security to’ written on the certificate in red with date and signature upon processing your application. Fees may be charged for the same.
Step 1: Apply for internet banking at your Post Office or bank. Once it is approved, you can access your NSC account online.
Step 2: There will not be any serial numbers anymore. 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.
Under Section 80C, investments in NSC provide tax savings of up to Rs. 1.5 lakh. Furthermore, the annual interest earned on NSC assets is treated as a fresh investment for tax purposes. TDS is not required on NSC; nevertheless, tax is required on interest earned.
The following are the NSC eligibility conditions that must be met in order to invest in NSCs.-
1. Hindu Undivided Families (HUFs), Trusts, Private and Public Limited Companies (PLCs) are not permitted to invest in NSC.
2. The person must be an Indian citizen. Non-Resident Indians (NRIs) are not permitted to invest in NSC.
3. The individual should not be a minor below the age of 10 years.
Investors are required to submit:
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