NSC - National Savings Certificate Last Updated : 06 Jun 2020

The NSC scheme is available at all NSC post offices and the Indian Government promotes the NSC scheme. Due to the number of post offices present in India and the easy access to these post offices, the scheme has become very popular in India.

The main aim of the scheme is for individuals to make small or medium savings, and tax benefits are provided for these savings. Since the scheme is encouraged by the Indian Government, the risks of investing in the scheme are low.

National Savings Certificate

The scheme was launched mainly for individuals, therefore, non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are not eligible to opt for this scheme. Only Indian citizens will be able to invest in the NSC scheme.

NSC Eligibility

The eligibility criteria for investors to purchase the NSC are mentioned below:

  • The individual must be an Indian citizen.
  • There is no age limit for individuals in order to purchase a certificate.
  • Non-resident Indians cannot invest in NSC.
  • Investments can be made with another adult or individuals can buy an NSC on behalf of a minor.
  • Under NSC VIII Issue, HUFs and Trusts are not eligible to invest in the scheme.

Latest Update

National Savings Certificate interest rates reduced by 110 bps

For the April to June quarter for the current financial year, the Central Government slashed the interest rates by up to 140 basis points (bps) on small savings schemes. The interest rates on the National Savings Certificate scheme has been brought down 110 bps. The rate of interest has been reduced from 7.9% to 6.8%. The interest that is generated from the scheme is calculated on a yearly basis. The scheme is a Government of India initiative and can be opened at Post Offices. The two maturity periods of the scheme are 5 years and 10 years. Under the scheme, tax benefits of up to Rs.1.5 lakh will be provided. Loans can also be availed against the amount available in the account. The government revises the interest rates on small savings schemes every quarter. The government decided to reduce the interest rates after the RBI cut the repo rate by 75 bps recently.

NSC Features

The main features of the scheme are mentioned below:

  • Minimum investments: The minimum amount that a certificate can be purchased for is Rs.100. The different denominations that the certificate can be purchased for are Rs.10,000, Rs.5,000, Rs.1,000, Rs.500, and Rs.100. Initially, small investments can be made, and individuals can increase investments when feasible.
  • Maturity tenure: 5 years and 10 years are the two maturity periods of the scheme that individuals can choose from.
  • Rate of interest: Currently, the rate of interest has been reduced from 7.9% to 6.8%. and it is compounded on an annual basis. However, the interest is payable only at maturity. For example, investment of Rs.100 will get the subscriber Rs.146.93 after 5 years of investment.
  • Nominations: Family members including minors can be added as nominees by the investor. In case the investor passes away during the tenure of the scheme, the nominee will be able to inherit the scheme.
  • Different types of NSC: Initially, the NSC IX Issue and the NSC VIII Issue were the two types of certificates available. However, as of December 2015, the Government of India stopped the NSC IX Issue. Therefore, only the NSC VIII Issue is available.
  • Loans against NSC: The NSC can be used as a security or collateral and can be provided to banks to avail loans. However, the respective post master must authorise the transfer of the certificate to the bank.
  • Purchase of NSC: Upon submitting the required documents, the scheme can be purchased at post offices.
  • Transfer of certificate: Transfer of NSC is possible from one post office to another. Transfer of certificate from one individual to another is also possible. However, the certificate will remain the same and the name of the new owner shall be written on the certificate and the name of the old owner will be rounded.

Advantages of NSC

Given below are the main advantages of investing in the NSC:

  • One of the main advantages of investing in the NSC is the tax benefits that individuals can avail on the investments they have made. The returns are also guaranteed under this scheme. Many individuals prefer the NSC scheme as it can provide a regular income once they retire.
  • Except for the interest that is earned in the final year, the remaining interest that is generated is tax-free.
  • In case individuals lose the original certificate, a duplicate certificate can be obtained.
  • Even after the maturity period, individuals have an option to continue investing in the scheme.
  • Transfer of the certificate is allowed from one individual to another. However, it is allowed only once during the lock-in period.
  • The interest that is generated is compounded on a yearly basis and reinvested towards the scheme. Therefore, the invested amount of the individual increases without purchasing certificates.

Documents required to NSC

Given below are the documents that must be submitted in order to purchase an NSC:

  • The NSC application form must be submitted.
  • Investors must submit an original identification proof such as Passport, Permanent Account Number (PAN) Card, Voter ID, Driving licence, Senior Citizen ID, or Government ID for verification.
  • The investor must submit a photograph.
  • Investors must submit an address proof such as Passport, telephone bill, electricity bill, bank statement along with a cheque as well as a Certificate or an ID card that has been issued by the Post Office.

Tax benefits provided by the NSC

Given below are the NSC tax benefits that individuals can avail by investing in the NSC:

  • Under Section 80C of the Income Tax Act, 1961, tax benefits of up to Rs.1.5 lakh can be availed by investing towards the NSC.
  • The interest that is generated on a yearly basis by investing in the NSC is considered as a new investment for tax benefits.
  • Tax Deducted at Source (TDS) is not applicable under the National Savings Certificate. However, as per the marginal income tax rates, the tax must be paid for the interest that is earned.

Maturity period and premature withdrawal under the NSC

Under most scenarios, the amount that has been invested towards the NSC cannot be withdrawn before the maturity period of 5 years. However, under certain cases, premature withdrawal is allowed. Given below are the cases where premature withdrawal is allowed under the NSC scheme:

  • In case the certificate holder passes away.
  • On the forfeiture of the certificate. However, the pledgee must be a Gazetted Government Officer.
  • If ordered by the court of law that the invested amount can be withdrawn.

However, certain documents must be submitted by the certificate holder for the withdrawal of the funds. Given below are the list of documents that must be submitted:

  • The original National Savings Certificate must be submitted.
  • The NSC encashment form will need to be submitted.
  • Proof of identity.
  • The attestation of the guardian is compulsory in case the NSC was purchased on behalf of a minor.
  • In case the certificate holder passes away, the nominee can encash the invested amount by submitting the Annexure 1 (registered at a post office) and the Annexure 2 (legal evidence) forms.

In case the amount is withdrawn within a year, no interest will be paid. A penalty will be charged in case of early withdrawals as well. The maturity amount is paid by the post office by cheque.


  1. Is there a denomination smaller than Rs. 100?
  2. No. there is no denomination less than Rs. 100. This means that all your investments HAVE to be in multiples of 100.

  3. Is the benefit for NSC under 80C Rs. 1 lakh or Rs. 1.5 lakhs?
  4. The benefits provided under section 80C will be to the tune of Rs. 1.5 lakhs. The confusion comes in when you look at the limit for 80C prior to 2014. The limit was changed to Rs. 1.5 lakhs from 201-15 and will continue to be subject to change as per the government’s rulings.

  5. Is there a lock in period with investment in NSC?
  6. Yes there is a lock-in period which is equal to the maturity period of the certificates. They can be redeemed early but only under specific conditions.

  7. Can a nomination be canceled or changed?
  8. Yes, a nomination can be canceled or changed at any time using Form 3 and by paying a nominal fee of Rs. 5.

  9. What is the maturity period and interest rate for NSC Issue VIII?
  10. With effect from 01-04-2013 the maturity period for NSC Issue VIII is 5 years and the NSC interest rate being offered is 6.8% per annum.

  11. What is the maturity period and interest rate for NSC Issue IX?
  12. As of 01-04-2013 the maturity period for Issue IX of NSC is 10 years and the interest rate on offer is 8.8% per annum.

  13. What is the minimum limit for investing in NSC?
  14. The minimum investment possible in NSC is Rs. 100.

  15. Will tax on NSC Interest earned be deducted at source?
  16. No, there is no TDS on the interest earned on investments in NSC. The tax payable is only calculated on the interest earned in the last year and it is up to the holder of the certificate to declare the income and pay the taxes.

  17. Which part of the IT Act does NSC come under?
  18. Investments made in NSC Issue VIII and Issue IX come under the purview of section 80C of the IT Act.

  19. Can I take a loan based on my NSC investments?
  20. Yes. NSC investments can be provided as collateral to banks, and other government organisations, in order to secure any loans.

  21. Can a trust or an HUF invest in NSC?
  22. Under the rules of Issue VIII of NSC, trusts and HUFs cannot invest in NSC.

  23. Who can take a single holder type certificate?
  24. Such a certificate can be purchased by an adult for themselves or on behalf of a minor.

  25. I am an Indian but not a resident of the country, can I invest in NSC?
  26. No, non-resident Indians cannot invest in National savings certificates.

  27. Can I taken an NSC certificate under a joint holding option?
  28. If you are not a trust or the Karta of an HUF taking an NSC on their behalf, then yes you can take an NSC under the joint holding option.

  29. What are the main features of NSC Issue VIII?
  30. The main feature of NSC Issue VIII are that it has no limit on the maximum investment possible. It also comes with an interest rate of 6.8% per annum and no TDS. The investment can be used to secure loans and get tax benefits up to Rs. 1.5 lakhs under Section 80C of the IT Act. It has a maturity period of 5 years, not available to trusts and HUFs, and comes in the minimum denomination of Rs. 100.

  31. What are the main features of NSC Issue IX?
  32. The main features of NSC Issue IX are that it comes in denominations of Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs. 10,000. There is no maximum investment limit and the interest rate has been reduced from 7.9% to 6.8%. . The maturity period for these certificates is 10 years and is subject to the same NSC rules as Issue VIII.

  33. Can armed forces personnel invest in NSC?
  34. Yes, personnel of the armed forces can invest in NSC. In their case, should they pass away or desert, the postmaster can be directed by the forces to pay the nominee or the legal heir the entire amount that was due under the investment.

About NSC

  • NSC, FD & Tax Break Under Section 80C of the Income Tax Act

    National Savings Certificates and Fixed Deposits are good investment options for those who have extra cash lying idle. NSCs are basically small savings options that can be availed from post offices. They combine guaranteed returns with tax savings, while fixed deposits are basically financial instruments that can be availed from financial institutions and banks. They offer better interest rates in comparison with simple savings accounts. Fixed deposits as well as National Savings Certificates are ideal investment options as they not only offer profitable interest rates, but they also offer tax breaks under Section 80C of the Income Tax Act, 1961.

    11 July 2018

  • Government of India cuts NSC interest rates

    In what could be a set back for NSC subscribers, the Government of India has cut the interest rate by 20 basis points. With the interest reduced to 0.2% to 7.6%, the Government said that on the basis of the decision of the government, interest rates for small savings schemes are to be notified on a quarterly basis. In addition they said that rates of small savings schemes would be linked to government bond yields. The move is expected to see banks lowering their deposit rates in line with the small savings rate offered by the government. That said, the interest rate in the five-year Senior Citizens Savings Scheme has been retained at 8.3 percent while the interest on the scheme is paid quarterly.

    29 December 2017

  • Aadhaar Made Mandatory for NSC

    Government has made biometric identification based on Aadhaar mandatory for all NSC or National Savings Scheme accounts. Existing users have to link their Aadhaar number to their NSC accounts by 31 December, 2017 for proper identification.

    Finance Ministry has issued Gazette notifications announcing Aadhaar as mandatory for NSC deposits.

    If a depositor does not have an Aadhaar number, he/she will have to submit proof of enrolment application for Aadhaar.

    Depositors with valid Aadhaar numbers who have not submitted it when applying for the account, shall provide their Aadhaar number to the concerned post offices where they have their NSC account, by 31 December, 2017.

    The Aadhaar obtaining deadline was extended last month by 3 months up to 31 December, 2017, for access to government subsidies and schemes. Earlier, the deadline to get Aadhaar was 30 September of this year.

    6 October 2017

  • Small Savers to Take a Big Hit Due to GST – National Savings Certificate Interest Rate Slashed

    Small savers were disappointed following the government’s decision to slash interest rates on most small saving schemes like public provident fund and Kisan Vikas Patra by 10 basis points. Trading of banking stocks was mixed following reports of the rate slash on small saving schemes. A decline of 0.29% was recorded in the BSE Bankex before GST was implemented. A report from ETNow revealed that the government slashed interest rates on KVP by 10 basis points to 7.5% from 8.5%. The decline in PPF interest rate was also down by 10 basis points to 7.8%. The interest rate so far as NSC was concerned was down by 10 basis points to 7.8%. Banks may be prompted to slash deposit rates by the government. Previously, the government had reduced the interest rates on Sukanya Samriddhi Scheme, KVP and PPF by 0.1% for the quarter between April and June.

    4 July 2017

  • Government slashes interest rate on savings accounts

    Government announced rate cuts on PPF, NSC and Kisan Vikas Patra. The reduction in PPF is the sharpest in nearly 15 years. But the government will be reviewing the interest rates in every quarter. The changes were linked to the market rates. The rate cut will ensure that the banks offer lower lending rate and which will translate to lower EMIs. 2 year fixed Deposit with SBI fetches interest rate of 7.5% per year. Thus the savings in PPF will still be attractive as it also has tax benefits attached to it.

    22 March 2016

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