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NSC (National Savings Certificate) - Interest Rate 2024 & Tax Saving Benefits

By Mohammed S Chokhawala

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Updated on: Jul 5th, 2024

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43 min read

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.

What is National Savings Certificate?

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.

NSC – Key Information
Interest Rate7.7% per annum
Minimum InvestmentRs.1,000
Lock-in Period5 years
Risk ProfileLow-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.

Who Should Invest in NSC?

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.-

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. An individual who is more than 10 years of age.

HUFs and Trusts cannot invest in National Savings Certificate

Features & Benefits of NSC

  1. Fixed income: Currently, the scheme is generating a guaranteed return at the rate of 7.7% for investors. The returns offered by NSC have generally been higher than FDs.
  2. Types: The scheme originally had two types of certificates – NSC VIII Issue and NSC IX Issue. The government discontinued the NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.
  3. Tax saver: As a government-backed tax-saving scheme, you can claim up to Rs.1.5 lakh under the provisions of Section 80C of the Income Tax Act, 1961. 
  4. Start small: You can invest as low as Rs.1,000 (or multiples of Rs 100) as an initial investment, and increase the amount when feasible.
  5. Interest rate: Currently, the rate of interest is 7.7% p.a. for Q1 FY 2024-25, which the government revises every quarter. It gets compounded annually but will be payable at maturity.
  6. Maturity period: The maturity period is five years.
  7. Access: You can purchase this scheme from any post office by submitting the necessary documents and undergoing the KYC verification process. Also, it is easy to transfer the certificate from one post office branch to another.
  8. Loan collateral: Banks and NBFCs accept NSC as collateral or security for secured loans. To do this, the concerned postmaster should put a transfer stamp on the certificate and transfer it to the bank.
  9. Power of compounding: The interest you earn on your investment gets compounded and reinvested by default, though the returns do not beat inflation.
  10. Nomination: The investor can nominate a family member (even a minor) so that they can inherit it in the unfortunate event of the investor’s demise.
  11. Corpus after maturity: Upon maturity, you will receive the entire maturity value. Since there is no TDS on NSC payouts, the subscriber should pay the applicable tax on it.
  12. Premature withdrawal: Generally, one cannot exit the scheme early. However, they accept it in exceptional cases like the death of an investor or if there is a court order for it.

NSC Interest Rate History

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-JuneJuly-SeptemberOctober-DecemberJanuary-March
2023-20247.7%7.7%7.7%7.7%
2022-20236.8%6.8%6.8%7.0%
2021-20226.8%6.8%6.8%6.8%
2020-20216.8%6.8%6.8%6.8%
2019-20208.0%7.9%7.9%7.9%
2018-20197.6%7.6%8.0%8.0%
2017-20187.9%7.8%7.8%7.6%
2016-20178.1%8.1%8.0%8.0%

Tax Benefits of NSC Investment

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.

How to Invest in NSC?

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.

How to Invest in NSC Offline

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.  

How to Apply for NSC Online

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.

Documents Required to Apply for NSC

Investors are required to submit:

  • Identity proof, such as a passport, permanent account number (PAN) card, driver's license, senior citizen ID, or any other official government identification
  • Photograph.
  • Address proof, like electricity bill, passport, phone bill, or bank statement.

Comparing NSC with Other Tax-saving Investments

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:   

InvestmentInterestLock-in PeriodRisk Profile
NSC7.7% p.a.5 yearsLow-risk
ELSS fundsMarket-linked, historical returns show 12% to 15% p.a.3 yearsMarket-related risks
PPF7.1% p.a.15 yearsLow-risk
NPSMarket-linked, historical returns show 8% to 10% p.a.Till retirementMarket-related risks
FD7% to 8% p.a.5 yearsLow-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

How to Request for a Duplicate National Savings Certificate

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:

  1. Serial numbers, denominations, NSC issue, and other information regarding the certificate(s).
  2. The purchase date of the certificates.
  3. The objective for filing for a duplicate certificate, together with additional details, must be indicated. 

Other Schemes:  
National Pension Scheme  
Senior Citizen Savings Scheme  
Post Office Saving Scheme  
Post Office Monthly Income Scheme

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Frequently Asked Questions

What is NSC?

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.

How to buy NSC online?

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.

How to buy NSC?

Step 1: Visit the nearest Post Office branch and submit the duly filled NSC application form
Step 2: Attach self-attested copies of the documents and proofs as required by the Post Office. Carry the original documents as well for verification. 
Step 3: Make the payment of your investment in the form of cash, cheque, or demand draft. 
Step 4: Upon processing your application, an acknowledgement of the same will be provided marking the initiation of your NSC account.

How to show NSC interest in income tax?

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.

NSC comes under which section?

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

NSC or KVP? Which is better?

There are a lot of differences in the working and objectives of the two schemes—the National Savings Certificate (NSC) and Kisan Vikas Patra (KVP). To make this difference evident, here is a comparison table.

ParametersNSCKVP
EligibilityResident Indians onlyOnly Resident Indians and Trusts
Minimum Deposit AmountRs.100Rs.1,000
Maximum Deposit AmountNo limitNo limit
Interest Rate (Q1 of FY 2023-43)7.7% p.a.7.5% p.a.
Investment Tenure5 years120 months
Premature WithdrawalNot allowedOnly after 30 months from the date of investment
Tax BenefitsAvailableNot Available
Loan FacilityAvailableAvailable
How to SubscribeAt Post Office branchesAt Post Office and participating bank branches
How to open NSC in the Post Office?
  • Visit the nearest Post Office branch.
  • Fill up 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 acknowledgement 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.

How to calculate NSC interest?

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.

How to encash/redeem NSC certificates after maturity?

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:

  • Original NSC certificate 
  • Identity proof
  • NSC encashment form
  • The person entitled to receive the encashment must sign behind the certificate after receiving the payment
Which is better? NSC or PPF?

Both these government-backed schemes are 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.

ParameterNSCPPF
Account TypeSingle or Joint Single only
Tenure5 years 15 years
Interest Rate7.7% p.a.7.1% p.a.
Number of AccountsMultiple accounts can be opened with a maximum deposit of Rs.10,000 per certificateOnly one PPF account per person.  
Exception: You can open an account for your child and be a joint account holder for it.
ContributorSelf, joint account holder, or guardian in the case of a minorSelf or parent of the minor
Tax BenefitsPrincipal is tax-free up to Rs.1.5 lakh per financial year u/s 80C; the interest is taxablePrincipal is tax-free up to Rs.1.5 lakh per financial year u/s 80C; the interest and maturity amount is tax-free as well
WithdrawalVisit the Post Office branch to withdraw or encash the NSC account balance. In case you are sending a representative, provide a signed letter to authorise the representative to withdraw the money.Visit the bank or Post Office branch to withdraw. Or, visit the NSI India website to download Form C or its equivalent to apply for withdrawal.
How long does it take for NSC to provide maturity amount double the principal amount?

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

How to get an NSC certificate?

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.

How to check the NSC certificate online?

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.

Does ULIP or NSC provide tax benefits u/s 80c?

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

How to transfer NSC to another 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.

How to fill an NSC application form?

Step 1: 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.  
Step 2: Paste the applicants’ photograph, and select the account you would like to open, i.e. ‘NSC VIIIth issue’ from the options.  
Step 3: Select the account holder type and account type from the available options. 
Step 4: In the case of ‘Minor through Guardian’, fill up the details of the minor in table 1. 
Step 5: Specify the amount you would like to deposit to open the account in figures and words. IF providing a cheque or DD, please write the serial number and date on it. 
Step 6: Now, provide all the personal and contact details of the applicants in table 2.  
Step 7: All the applicants must add their signatures at the end of the page along with their names. 
Step 8: Next, skip to the ‘Nomination’ section and enter the applicants’ names and the nominee’s name. In the table provided, provide details, such as the applicant’s relationship with the nominee, the nominee’s full address, Aadhaar number, and others. 
Step 9: In the case of illiterate applicants, add the signatures of two witnesses for the same along with the applicants’ signatures. That’s it!

How to find the NSC certificate number?

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.

How to withdraw NSC before maturity?

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 court
Which is better? NSC or 5-year Tax-Saving FD?

Though both NSC and 5-year FDs have a tenure of five years and offer income tax deduction u/s 80C, there are quite a few things that are different. If you are confused on which product to choose to save taxes, refer to the below table before deciding:

ParameterNSCFD
TDS deductionNo deduction upon maturityTDS deducted upon maturity
Collateral facilityCan be usedCannot be used
Interest Compounding FrequencyOnce a yearOnce every quarter
Interest Rate7.7% p.a. (Q1 of FY 2023-24)5% – 7.25% p.a. (varies from bank to bank)
What is the minimum amount for NSC?

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.

How to know my NSC ID?

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

How to link NSC with Aadhaar?

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

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

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.

How to pledge NSC?

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:

  • 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.

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.

NSC is for how many years?

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

How to verify an NSC certificate?

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.

NSC vs LIC? Which is better?
ParameterNSCLIC
ObjectiveSmall savings with returnsLife cover with sum assured
Payment FrequencyOne-time lump sum paymentPremiums can be paid in monthly, quarterly, or yearly intervals
Tax BenefitsCapital invested gets income tax deduction u/s 80CCapital, interest earned, and maturity amount are exempt from tax
Sub-categoriesNone as of nowMany different life insurance schemes are available
What are the tax advantages of NSC?

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.

Who Should Invest in NSC?

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.

What are the documents required to apply for NSC?

Investors are required to submit:

  • Identity proof, such as a passport, permanent account number (PAN) card, driver's license, senior citizen ID, or any other official government identification
  • Photograph.
  • Address proof, like electricity bill, passport, phone bill, or bank statement.
How to request for a duplicate National Savings Certificate?

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:

  • Serial numbers, denominations, NSC issue, and other information regarding the certificate(s).
  • The purchase date of the certificates.
  • The objective for filing for a duplicate certificate, together with additional details, must be indicated. 
About the Author

I'm a chartered accountant, well-versed in the ins and outs of income tax, GST, and keeping the books balanced. Numbers are my thing, I can sift through financial statements and tax codes with the best of them. But there's another side to me – a side that thrives on words, not figures. Read more

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