The National Savings Certificate (NSC) program is a fixed-income plan. It is a popular savings product in India. This program may be activated at any Post Office. The NSC plan is a project of the Government of India. As a result, it ensures returns. This savings bond encourages investors with low and moderate incomes to save. They may also be eligible for a tax break.
Section 80C of the Income Tax Act exempts NSC investments up to Rs 1.5 lakhs from tax. They have a five-year lock-in term. Fixed interest is earned on NSC certificates. The current interest rate is 7.7%. NSC, like other fixed-income instruments such as PPF and Post Office FDs, is a safe and low-risk vehicle. The required minimum deposit is Rs 100. There is no maximum investment limit in NSC. For NSC investments, there is no TDS.
What is National Savings Certificate
National Savings Certificate is a savings bond scheme that encourages subscribers, primarily small to mid-income investors, to invest while saving on income tax under Section 80C.
| 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.
Features & Benefits of NSC
- Interest Rates : The certificates earn an annual fixed interest, which is revised every quarter by the government, thus guaranteeing a regular income for the investor.
- Maturity Period : The scheme originally had two types of certificates – NSC VIII Issue (5 year tenure) and NSC IX Issue (10 year tenure). With the discontinuation of the latter in December 2015, only the former issue is available for subscription.
- Tax Saver: As a government-backed tax-saving scheme, the principal invested in NSC qualifies for tax savings under Section 80C of the Income Tax Act up to Rs. 1.5 lakhs annually.
- Investment Flexibility : You can invest as small as Rs. 100 as an initial investment with no maximum limit.
- Accessible: It can be easily bought from any post office on submission of required KYC documents. Also, it is easy to transfer the certificate from one PO to another as well as from one person to another without impacting the interest accrual/maturity of the original certificate.
- Loan Collaterals: NSC certificates are accepted as collateral or security for secured loans in Banks and NBFCs. In such a case, a transfer stamp is put on the certificate and transferred to the bank while disbursing loans.
- Power of Compounding: Interest earned gets compounded annually and reinvested by default but will be payable only at maturity.
- Nomination: The investor can nominate any family member (even a minor) so that they can inherit it in the case of an unfortunate event of the investor’s demise.
- Corpus on Maturity: The investor will receive the entire corpus value on maturity. As there is no TDS on NSC payouts, the subscriber should pay the applicable tax on it while filing his Income tax returns or paying his advance tax.
- Premature Withdrawal: Generally, one cannot exit the scheme early except on the death of an investor, on a court order, or on forfeiture by a pledgee who is a Gazetted Government Officer for it.
Who Should Invest in NSC?
The NSC offers guaranteed interest and complete capital protection, just like some other fixed income instruments – Public Provident Fund and Post Office FDs. However, they cannot deliver inflation-beating returns like tax saving Mutual Funds and National Pension Systems.
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-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% |
Eligibility Criteria for NSC
- Hindu Undivided Families (HUFs), Trusts, Private and public limited companies are not eligible to invest in NSC.
- The individual must be an Indian citizen. Non-resident Indians (NRIs) are not eligible to invest in NSC.
- There is no age limit for individuals in order to purchase a certificate.
Documents Required to Apply for NSC
- The NSC application form.
- Investors to provide an original identification proof such
- Passport
- Permanent Account Number (PAN Card)
- Voter ID
- Driving licence
- Senior Citizen ID, or Government ID for verification.
- Photograph.
- Address proof like electricity bill, Passport, telephone bill, bank statement along with a cheque.
How to Invest in NSC?
Steps 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.
Steps 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
FAQs
What is NSC full form?
NSC stands for National Savings Certificate, a government scheme promoting investment.
How to Withdraw NSC After Maturity
Make a visit to the post office nearest to you and submit a hand-written maturity claim with the original NSC, identity slip received while purchasing, and identity proof. If the identity slip is present, the processing and payment will be done immediately.