What is the National Savings Certificate (NSC)?
National Savings Certificate is an Indian Government Scheme that provides fixed income to investors and thus, acts as a tax-saving instrument. One can purchase this scheme from any post offices in India. One can invest in this scheme, as it provides fixed returns to investors. This low-risk scheme benefits small to medium-income investors.
Features & Benefits of NSC
- Fixed Income
The NSC certificate offers fixed returns at 6.8% annual interest. From this scheme, the Indian residents enjoy getting a regular income. One can calculate this interest rate using the nsc interest rate calculator.
This scheme has two types of certificates such as NSC VIII Issue and NSC IX Issue. From December 2015, the NSC IX Issue is no more available in the Indian Government. Only the NSC VIII Issue is open to all investors as of now.
- Tax-saving Instrument
NSC is a tax-saving scheme in India, so you can invest your maximum amount to get the tax benefits under the Section 80C income tax law of Government.
- Start Investing Small
Initially, you can start investing a minimum amount of Rs. 1000 or multiples of Rs. 100, and then start increasing your investment when you have enough money.
- Interest Rate
As of now, the nsc interest rate is 6.8%. But this rate may not be permanent, as the Indian Government revises it every three months. It gains a good compound interest annually, but you will get them at maturity.
- Lock-in Period
Here the maturity period of the scheme is five years.
- Access to this Scheme
One can get the service of this scheme at your nearest post office. Submit the required documents to the post office nsc scheme and finish the KYC procedure. One can easily transfer the certificate from one PO to another.
- Loan Security
Many banks provide you loans when you show them this NSC as security. To avail loan using NSC, the concerned postmaster has to provide a stamp to the NSC. Then you can use this stamped NSC to avail loan from banks.
- Compound Interest
Here your investments earn a compound interest annually and get reinvested default in this scheme. So you will get good returns, but the returns depend on inflation.
Here the investor can nominate any family member to avail of this scheme benefit, in the event of the death of the investor.
- Corpus after Maturity
After completing the maturity period, you will get your entire investment with interest. There is no TDS on your returns but the investor should pay other taxes for it.
- Premature Withdrawal
One cannot exit this scheme unless under emergencies. In the event of death, the nominee can make a premature withdrawal. One can also withdraw the scheme under court order.
Eligibility Criteria for National Saving Certificate
To invest in NSC, one has to meet the eligibility conditions.
- All Indian residents can apply to this NSC tax-saving scheme
- NRIs or Non-residents of India are not eligible to buy this scheme. But in some situations, Indian residents who are becoming NRIs after investing in this scheme can get the returns after the maturity period.
- Hindu Undivided Families or Trust members are not eligible to apply this scheme.
- Karta of Hindu Undivided Families using his name can apply to this scheme.
Documents Required For NSC
If you meet the above eligibility conditions, you can apply for this NSC scheme along with some mandatory documents. They are
- NSC Application Form
- Original Passport
- Original Permanent Account Number (PAN)
- Original Voter ID
- Original Driving License
- Senior Citizen ID or other ID for age verification
- Passport size photograph
- For address proof, provide all the documents like telephone bill, electricity bill, passport, etc.
- Cash or cheque deposit along with a bank statement
Where to buy the NSC?
In earlier cases, the investors get the pre-printed NSC certificates from post offices or authorized banks. But now, this procedure is not practiced from 1st July 2016. As you will get the NSC certificates as
- Two modes of recorded certificates namely electronic mode (e-mode) or Passbook mode.
- One can buy this certificate from all Public Sector Banks and other authorized banks such as HDFC, Axis, and ICICI banks.
Application Procedure for NSC
To apply for this NSC, one can visit the nearest post office along with the above-mentioned documents. After submitting the documents, you need to either pay cash or deposit a cheque. One can also apply for nsc online.
How to invest in National Savings Certificate?
Follow the below steps to make NSC investments
- The first step is to fill the NSC application form available at an nsc post office or get through the online website of the Indian Post Office. Download the national saving certification online form and fill it.
- The next step is to submit the self-attested copies of all mandatory KYC documents. For verification, you need to provide even original copies of all documents.
- Now, pay the purchase amount of this scheme either by cash or cheque.
- Once you finish the above steps, you can collect the NSCs of your purchase amount from the post office.
NSC Interest Rate
NSC interest rate varies according to the maturity period of NSCs. One can also use a national saving certificate calculator to calculate the interest rate. Initially, the Government was providing this scheme in two tenure variants. The interest rates for the two tenures are given below.
|Issue||Period||Interest Rate||Compounding Frequency|
|NSC 8 Issue||5 years||8.50%||6 months|
|NSC 9 Issue (Government Closed)||10 years||8.80%||6 months|
But now, the Indian Government has removed the NSC 9 issue due to some reasons, so the only available certificate is NSC 8 issue.
Current Interest Rate in National Saving Cretificate (NSC)
Since the interest rate varies for every three months, the current interest rate is 6.8%. Here we will see the historic nsc interest rate chart varying over this period.
|Time||Rate of Interest|
|Q1 FY 2018-2019||7.6%|
|Q2 FY 2018-2019||7.6%|
|Q3 FY 2018-2019||8.0%|
|Q4 FY 2018-2019||8.0%|
|Q1 FY 2019-2020||8.0%|
|Q2 FY 2019-2020||7.9%|
|Q3 FY 2019-2020||7.9%|
|Q4 FY 2019-2020||7.9%|
|Q1 FY 2020-2021||6.8%|
Tax Benefits of NSC Investment
If the subscriber makes the investments of up to Rs. 1.5 lakhs under the NSC scheme, then the subscriber can earn good returns under Section 80C. The interest that you earn in this maturity period gets added to the initial payment amount, and you will get the amount. The final amount is eligible for tax deductions. Thus, while your amount after the maturity period, your amount is taxable.
Calculation of NSC
Your first investment amount or principal amount = Rs. 10,000
Interest Rate = 6.8%
So, you will get at the end of the first year as interest = Rs. 680
Now, in the second year, your initial amount gets compounded = Rs. 10,680
Thus, your interest amount applies to taxes in the final year of maturity, that too when your amount crosses the tax slab range.
Advantages of NSC
- One of the crucial advantages of investing in this scheme is the tax benefits that subscribers get under this NSC. Subscribers get guaranteed returns and also highly useful for retirees. As retirees get some regular income under this scheme.
- All the interest amounts are free from taxes except the interest that you will get in the final year.
- In the event of missing your original NSC certificate, you can apply for a duplicate certificate.
- After the maturity period, one can continue to invest in this scheme.
- It is easy to transfer the certificate from one person to another. But one can transfer this NSC for only one time.
- The interest amount that you get in the first year gets reinvested into the scheme for the next year.
Who should consider investing in NSC?
This investment scheme offers guaranteed returns to investors. So, it is best for low to medium-income earners. Also, for those who don’t like to invest in schemes changing due to market inflation, can opt for this NSC. An investor can invest a low investment amount of Rs. 100 or multiples of Rs. 100 and can earn good returns.
The Indian Government offers an attractive national saving certificate interest rate, and the scheme serves as the best option for those who don’t like risky returns. The government has made this scheme easily accessible to people, as you can visit the nearest post offices to buy this scheme. This is one of the best savings schemes for individuals, which is open only for Indian residents.
Transfer of NSC
One can transfer the NSCs from one person to another or from one post office to another, and it doesn’t affect the post office nsc interest rate. Here are the transfer options to follow.
- To transfer NSC from one post office to another post office, you need to fill the Form NC-32. Submit this form to the post office to avail of the transfer.
- To transfer NSC from one person to another person, you need to fill the Form NC-34. You will get this form at the post office. So, fill it and submit it to the post office. You can do this transfer process only once.
Loan Against National Savings Certificate
You are eligible to avail of a loan against NSC investments, but need to understand certain terms and conditions for getting a loan.
- Only Indian residents who bought the NSC scheme can apply for a loan.
- Some authorized private and public banks offer this loan facility to people under the NSC scheme.
- The margin value of the loan against NSC depends on the left-over time of maturity.
- The interest rate for a loan against NSC varies based on banks or individual loan applicants.
- The loan tenure is equal to the left-over time of maturity of the NSC
Issue of Duplicate National Savings Certificate
In the event of your NSC certificate gets lost or destroyed or stolen, you can apply for a duplicate certificate. To apply for this certificate, get Form NC-29 from the post office and fill out, submit the form. You may need to include certain details in the form such as:
- Certificate details such as denominations, serial numbers, NSC issue detail, etc.
- Date of purchase of NSC certificate
Maturity Period and Premature Withdrawal under the NSC
Under most circumstances, one cannot withdraw the invested amount under NSC before the lock-in period of 5 years. But, under serious cases, premature withdrawal is possible.
- In the event of a subscriber of the NSC passes away
- If the court issues an order for premature withdrawal, you can get this invested amount
To apply for premature withdrawal under the above eligible conditions, one has to submit the following documents.
- Original NSC certificate
- NSC encashment form
- Identity proof
- Attestation of the Guardian
- In the event of the death of the investor, the nominee should submit the Annexure 1 and Annexure 2 forms
- Annexure 1: To register at a post office
- Annexure 2: For legal evidence
Interest Applicability on Premature Withdrawal
Based on the premature withdrawal of the amount, the different interest applicabilities are:
|Withdrawal Time||Interest Applicability|
|Withdrawal before the 1-year of completion||No interest|
|Withdrawal after the 1-year of completion||Interest rate is applicable based on the time|
NSC Interest Calculator
A National Savings Certificate subscriber can calculate the interest amount that he/she will receive after investing in NSC using an NSC Calculator. You need certain details to calculate the interest rate.
- The NSC type
- The year of purchase of NSC
- Investment amount
Difference Between NSC, ELSS Funds, PPF, FD, and NPS
NSC is one of the best tax-saving instruments. Under Section 80C of the Income Tax Act, one can get good tax benefits.
|Investment||Interest Rate||Maturity Period||Risk Profile|
|NSC||6.8%||5 Years||Less risk|
|PPF||7.17%||15 Years||Less risk|
|ELSS Funds||2% to 15%||3 Years||Risks based on market|
|FD||5% to 7%||5 Years||Less risk|
|NPS||8% to 10%||Until retirement||Risks based on market|
FAQ’s on National Saving Certificate (NSC)
Q1: Where to buy this NSC?
Ans: One can buy the National Savings Certificate at your nearest post offices or apply nsc online.
Q2: Whether an investor can add nominee in an NSC?
Ans: Yes, an investor can add nominee details under the NSC scheme to avail of the investment amount in the event of the death of the investor.
Q3: Can NRIs invest in NSC?
Ans: No, NRIs are not eligible to invest in NSC.
Q4: How to pay the investment amount to buy NSC?
Ans: One can buy NSC either through paying cash or cheque.
Q5: Whether it is possible to transfer NSC to another person immediately?
Ans: After 1 year of the maturity period, you can transfer NSC to another person.
The Bottom Line
This is all about the National Savings Certificate and its tax benefits. Here it is a low-risk investment scheme one can get good returns with the compounded interest amount. This is the best investment scheme for risk-averse investors. So, invest the amount that you can, and get fixed returns from it.