National Savings Certificate: Govt-Backed NSC Offers Tax Benefits, Don’t Miss New Interest Rates


Looking to diversify your portfolio with a low-risk option that offers tax savings? Look no further than National Savings Certificates (NSC)!

The National Savings Certificate (NSC) is a government-backed fixed income investment scheme aimed at providing conservative investors with a low-risk option for steady income while also offering tax-saving benefits. The current interest rate being offered is 7.7% per annum. The scheme has gained popularity among investors due to its stability and security, as it is supported by the government.

Investment Features

Under the NSC scheme, investors commit their funds for a fixed maturity period of five years, during which they receive guaranteed returns on their investment. Unlike some other investment options, there is no upper limit on the amount of NSCs that can be purchased, making it accessible to a wide range of investors. Additionally, NSCs are available at all NSC post offices across the country, ensuring convenience for investors.

Guaranteed Returns and Interest Calculation:

NSCs offer a fixed interest rate, currently set at 7.7% per annum (p.a.). This means you’ll earn a predetermined rate of interest on your investment each year. Unlike some schemes, the interest on NSCs is compounded annually.

Here’s how compounding works:

  • The interest earned each year is added to the principal amount (the initial investment) before calculating the interest for the next year.
  • This means you earn interest on both your initial investment and the accumulated interest from previous years.

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Payment of Interest in NSC:

While the interest is compounded annually, it’s important to note that it’s not typically paid out each year. Instead, the total interest is paid out at the time of maturity (after five years). This means you can reinvest the compounded interest for even greater returns over the entire investment period.

Benefits of the NSC Scheme

One of the key benefits of investing in NSCs is the tax-saving advantage it offers. Deposits made under the NSC scheme qualify for deductions under Section 80C of the Income Tax Act, allowing investors to reduce their taxable income and save on taxes. Furthermore, since the NSC scheme is backed by the government, investors can be assured of the security of their funds, making it an attractive option for those seeking low-risk investments.

Eligibility and Account Opening

To be eligible to invest in NSCs, individuals must be Indian citizens with no specified age limit (except minors above 10 years old). Non-Resident Indians (NRIs), Hindu Undivided Families (HUFs), and Trusts are not eligible. However, up to three adults can jointly open an NSC account, and guardians can open accounts on behalf of minors or individuals with unsound mental faculties.

The minimum deposit required is Rs 1000, with subsequent deposits in multiples of Rs 100. There’s no maximum investment limit, offering flexibility. NSC accounts can be opened in your name or jointly with others.

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Maturity and Extension

The NSC scheme offers a fixed maturity period of five years. However, investors have the option to extend the maturity for one additional three-year block. This extension can be beneficial for those seeking to lock in the guaranteed interest rate for a longer period or who may not need immediate access to their funds. It’s important to note that the extension needs to be done before the initial maturity date.

Pledging and Transferring

NSC accounts can be pledged or transferred as security under certain circumstances, such as to banks, corporations, or other authorized entities. This provides investors with additional flexibility in managing their investments and accessing liquidity when needed.

Premature Closure

While NSC accounts generally have a fixed maturity period of five years, premature closure is allowed under specific circumstances, including the death of the account holder(s), court orders, or forfeiture by a gazetted officer acting as a pledgee.

Documents required for Premature withdrawal of NSC

The premature withdrawal of NSC requires specific documents which are mentioned below.

  • Original NSC documents.
  • Filled in NSC encashment form.
  • Identity proof.
  • For minors, attestation of the guardian must also be presented.
  • For nominees applying for withdrawal, Annexures 1 and 2 forms must also be submitted.

Usually, the post office releases the corpus via cheque.

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Latest Updates

The government periodically revises the interest rates for NSCs and other small savings schemes. While the current rate for NSCs remains unchanged at 7.7% for the April-June quarter, it’s important to note that these rates are reviewed quarterly. This allows the government to adjust the rates based on economic conditions.

History of National Savings Certificate Interest Rates

Here is a list of historic NSC Interest Rates-



What is the minimum deposit for NSC?

The minimum investment amount for NSC is Rs. 1,000.

What is the current NSC interest rate?

The current NSC interest rate for NSC is 7.7% per annum.

How to show NSC interest in Income tax?

While NSC interest falls under “Income from Other Sources” for taxes, it’s tax-exempt for the first four years due to reinvestment and qualifies for Section 80C deduction. (In simpler terms, you don’t pay tax on the interest for the first four years).

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