NSC (National Savings Certificate) - Interest Rate 2024-25 & Tax Saving Benefits

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.

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.

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.

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.

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

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.

• 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.

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.

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

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.

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.

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

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.

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!

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:

• 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

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:

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:

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.

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:

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

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:

• 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.

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.