National Savings Certificate

When it comes to investing your hard-earned money, it is crucial to choose options that offer both security and decent returns. The National Savings Certificate (NSC) is a government-backed investment scheme in India that provides individuals with a safe and reliable avenue for investing their savings. 

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Let’s discuss the features, and benefits of inveting in National Savings Certificates.

What is National Savings Certificate?

The National Savings Certificate (NSC) is a government-backed savings scheme that offers a fixed interest rate. It is a popular investment option for small savers and investors who are looking for a secure and low-risk investment option. The NSC is primarily designed to encourage small savings and provide a safe investment option for individuals. 

Policyholder have the option to make an investment in NSC at the nearest post office, whether it's in your name, on behalf of a minor, or as a joint account with another adult. The NSC has a predetermined maturity period of five years, and there are no restrictions on the maximum amount you can purchase.It is considered one of the safest investment options due to its sovereign guarantee.

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 of the Income Tax Act, 1961

Who Should Invest in National Savings Certificate?

The National Savings Certificate (NSC) is an ideal investment option for individuals seeking a secure way to earn consistent interest while enjoying tax benefits. NSC ensures guaranteed interest and complete capital protection. 

The NSC is specifically designed as a savings scheme for individual Indian residents, and therefore, it is not open to Hindu Undivided Families (HUFs), trusts, or non-resident Indians (NRIs). Additionally, both young and older individuals can invest in NSC as there are no specific age restrictions.

To summarize the eligibility conditions for investing in NSCs:

  • NSCs cannot be purchased by HUFs, trusts, or private/public limited companies (PLCs).

  • The investor must be an Indian citizen. NRIs are not eligible to invest in NSCs.

  • There are no minimum or maximum age limits for purchasing NSC certificates.

Overall, individuals who prioritize the safety of their investments, want to save on taxes, and are comfortable with moderate returns can consider investing in the National Savings Certificate.

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What are the Features & Benefits of National Savings Certificate? 

NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.

  • Interest rate: Currently, the rate of interest is 7.7% p.a. for Q1 FY 2023-24. NSC offers a fixed interest rate determined by the government. The interest rate remains constant throughout the investment tenure, providing stability.

  • Maturity period: NSC has a fixed maturity period of five years. This allows individuals to plan their savings and financial goals accordingly.

  • Access: NSC can be easily purchased from any post office by submitting the required documents and undergoing the KYC verification process. Additionally, transferring the certificate from one post office branch to another is a simple process.

  • Loan collateral: NSC serves as collateral or security for secured loans from banks and non-banking financial companies (NBFCs). The certificate can be transferred to the bank by obtaining a transfer stamp from the postmaster.

  • Power of compounding: The interest earned on NSC investments is compounded and reinvested automatically. This allows for the growth of the investment over time, although the returns may not surpass inflation.

  • Nomination: Investors have the option to nominate a family member, including a minor, to inherit the NSC in the event of their unfortunate demise.

  • Corpus after maturity: Upon maturity, the investor receives the entire maturity value of the NSC. It's important to note that the subscriber is responsible for paying the applicable tax on the maturity amount, as there is no TDS (Tax Deducted at Source) on NSC payouts.

  • Premature withdrawal: Generally, early withdrawal from the NSC scheme is not allowed. However, exceptions are made in cases such as the death of the investor or when there is a court order for withdrawal.

  • Fixed income: Currently, NSC offers a guaranteed return at a rate of 7.7% for investors. The returns provided by NSC have historically been higher than those offered by fixed deposits (FDs).

  • Types: NSC originally had two types of certificates, namely NSC VIII Issue and NSC IX Issue. However, the government discontinued the NSC IX Issue in December 2015, leaving only the NSC VIII Issue available for subscription.

  • Start small: NSC allows investors to start with a minimum investment of Rs. 1,000 (or multiples of Rs. 100) and increase the amount as per their convenience.

  • Tax benefits: Under the provisions of Section 80C of the Income Tax Act, investments in NSC qualify for a deduction. Individuals can avail a tax deduction of up to Rs.1.5 lakh as per the Income Tax Act of 1961.

Tax Benefits under NSC Investments

Investing in the National Savings Certificate (NSC) offers tax benefits to investors. Here's a breakdown of the tax advantages associated with NSC investments:

  • Tax rebate under Section 80C: Investors can claim a tax rebate on their NSC investment under Section 80C of the Income Tax Act of 1961. While there is no maximum limit on the amount that  can be invested in NSC, only investments up to Rs. 1.5 lakh per year are eligible for this tax rebate.

  • Tax break on interest earned: The interest earned on NSC certificates is considered as reinvested for the first four years. As a result, this interest amount also qualifies for a tax break under Section 80C, subject to the overall annual limit of Rs. 1.5 lakh.

  • Taxation of fifth-year interest: Unlike the first four years, the interest earned in the fifth year of NSC is not reinvested. Therefore, it is taxable at the investor's applicable slab rate. The interest earned in the fifth year is considered as part of the investor's taxable income and is subject to tax as per their income tax bracket.

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How to Invest in NSC?

To invest in the National Savings Certificate (NSC), the process has evolved since 2016. 

Here are the key points to consider:

  • Physical NSC certificates issued by banks or post offices are no longer available.

  • Currently, NSC can be purchased through the electronic mode (e-mode) or the Passbook mode.

  • To invest in NSC through the e-mode, you need to have a savings account at an authorized bank or post office.

  • Activating your internet banking facility is necessary to proceed with the investment.

By following these steps, you can invest in NSC and benefit from its tax-saving features.

Documents Required to Apply for NSC

To apply for a National Savings Certificate (NSC), the following documents are required:

  • Application form: Complete and sign the NSC application form, which can be obtained from the post office or online.

  • Proof of identity: Submit a valid government-issued identification document such as a passport, driver's license, or Aadhaar card.

  • Proof of address: Provide a document that verifies your residential address, such as a utility bill, bank statement, or rental agreement.

  • Passport-sized photographs: Attach a couple of recent passport-sized photographs of the applicant.

Comparison of NSC  with Other Tax-Saving Investments

National Savings Certificate (NSC) is a popular tax-saving investment option available in India. 

Some of the other popular choices in India are:

  • Equity-linked saving scheme (ELSS)

  • Public Provident Fund (PPF)

  • National Pension Scheme (NPS)

  • Tax-saving fixed deposits (FD)

NSC vs Other Tax Saving Investments 

Name of investment Interest rate (%) Maturity period Term of risk
National Saving Certificate 7.7% p.a. 5 years Low risk
Equity-linked saving scheme 12% to 15% p.a. 3 years Market-related risk
Public Provident Fund 7.1 % p.a. 15 years Low risk
National Pension Scheme 8% to 10% p.a. Till retirement Market-related risk
Tax saving fixed deposits 4% to 6% p.a. 5 years Low risk

Why are Guaranteed Plans Better than NSC?

Considering the historical returns of National Savings Certificate, Guaranteed plans are often considered better than National Savings Certificate (NSC) for several reasons. 

They provide a higher level of safety and security for your investment, as they are backed by insurance companies or financial institutions. These insurance policies offer a 100% guaranteed return on investment within a specific timeframe and often provide a higher rate of return compared to NSC.
Below mentioned are the returns of NSC in the previous:

Time Period  Interest Rate
April-June (Q1 2023-24) 7.7%
January-March (Q4 2022-23) 7.0%
October-December (Q3 2022-23) 6.8%
July-September (Q2 2022-23) 6.8%
April-June (Q1 2022-23) 6.8%

How to Get a Duplicate National Savings Certificate Issued? 

To request a duplicate National Savings Certificate (NSC) in India, you can follow these steps:

  • Visit the Post Office: Go to the post office where you initially purchased the NSC or any post office authorized to handle NSC transactions.

  • Obtain the Application Form: Ask the post office staff for the application form required for requesting a duplicate NSC. They will provide you with the necessary form.

  • Fill out the Form: Fill in the application form with accurate details. 

The required information fields are:

  • Information such as certificate serial numbers, denominations, NSC issuance details, and other relevant certificate-related data.

  • The date of purchase for the certificates.

  • The reason for requesting a duplicate certificate, along with any additional pertinent information, should be clearly stated.

Remember to keep the duplicate NSC in a safe place to avoid any future loss or damage. It's advisable to inform the post office immediately if you find the original NSC after obtaining a duplicate.

Wrapping it up!

The National Savings Certificate provides many benefits, but investors must invest in it based on their tax savings and tax-free income goals. If you are a conservative investor and are looking for a regular return on investment, NSCs are an excellent option. 


  • Who should invest in a National Saving Certificate?

    Any investor looking for a safe investment plan that gives regular benefits can invest in a National Savings Certificate. NSCs offer complete protection of capital and guaranteed interest. 
  • What are the benefits of the National Savings Certificate? 

    The benefits of the NSC include flexible interest rates, guaranteed interest, maturity period, savings tax, individual investments, premature encashment, premature withdrawal, compound interest, and fixed interest rates.
  • What are the tax implications and returns on NSC?

    You can save tax under section 80C of the Income Tax Act with NSC investments up to only Rs. 1.5 lakh. Currently, the NSC earns an interest rate of 8.1% with a lock-in period of 5 years, with the interest rates compounded annually.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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