What is the National Savings Certificate (NSC)?

The NSC is a government-backed fixed-income investment scheme in India that offers assured returns and tax benefits under Section 80C. It is considered a low-risk savings option.

Who is eligible to invest in NSC?

Any Indian resident individual, including minors above 10 years of age, can invest in NSC. However, NRIs (Non-Resident Indians) are not eligible.

What is the minimum and maximum amount I can invest in NSC?

The minimum investment is ₹100, and there is no maximum limit. You can invest in multiples of ₹100 as per your convenience.

How long is the investment term in NSC?

NSC currently comes with a fixed maturity period of 5 years. It offers guaranteed returns for the entire duration.

Is the interest earned on NSC taxable?

Yes, interest on NSC is taxable. However, the interest accrued each year is considered reinvested and qualifies for tax deduction under Section 80C, up to ₹1.5 lakh annually.

Can I transfer my NSC to someone else?

Yes, NSC can be transferred to another person after 6 months from the date of issue, through proper endorsement. Transfers are allowed to close family members or eligible individuals.

Can I withdraw my NSC before maturity?

Premature withdrawal of NSC is not allowed except in exceptional cases like the holder's death or court order. However, you can use NSC as collateral for a secured loan.

What happens after the maturity of my NSC?

On maturity, the invested amount along with accrued interest is paid out. You may choose to reinvest in a new NSC to continue earning fixed returns.

NSC Calculator - Calculate National Savings Certificate Maturity

NSC - A Comprehensive Guide

What is NSC?

The National Savings Certificate (NSC) is a government-backed savings scheme that offers a safe and reliable investment option for individuals aiming to grow their savings while enjoying tax benefits. It is ideal for risk-averse investors and taxpayers who wish to reduce their taxable income. Despite its lock-in period and taxable interest, NSC remains a dependable choice due to its fixed returns and sovereign guarantee.

Key Features of NSC

Government-Backed: Investment scheme offering low-risk returns, backed by the Government of India.
Fixed Interest Rate: Determined by the Government of India, typically revised quarterly. (Currently around 7.7% p.a.)
Tax Benefits: Eligible for tax benefits under Section 80C of the Income Tax Act (up to ₹1.5 lakh per financial year).
Eligibility: Open only to Indian residents. NRIs are not eligible.
Lock-in Period: A fixed lock-in period of 5 years with interest compounded annually.
Investment Amount: Minimum of ₹100, with no maximum limit.
Interest Payment: Interest is paid only at maturity, but is compounded annually.
Transferability: Can be transferred from one person to another under specific conditions.
Premature Withdrawal: Not allowed except in cases like the death of the investor.

How Does NSC Work?

When you purchase an NSC at a Post Office, the amount you invest earns a fixed interest rate compounded annually. The interest is added to the principal every year and is paid out only at maturity (after 5 years).

For example, if you invest ₹1,000 in NSC at an interest rate of 6.8%, the interest is calculated every year on the total principal. At the end of the 5-year tenure, you will receive the total principal along with compounded interest.

Interest Rates on NSC

The interest rate on NSC is fixed by the government and is subject to quarterly revisions. As of Q2 FY 2025, the interest rate is 7.7% per annum.

The interest on NSC is compounded annually, meaning interest is added to the principal every year and earns more interest in subsequent years. The total interest is paid at maturity.

Tax Benefits of NSC

Section 80C Deduction: The principal amount invested in NSC is eligible for tax deduction under Section 80C, allowing you to save up to ₹1.5 lakh annually.
Taxable Interest: While the principal investment qualifies for a tax deduction, the interest earned on NSC is taxable under "Income from Other Sources".
No TDS (Tax Deducted at Source): NSC does not deduct TDS, but the interest is taxable, and the investor must declare it while filing tax returns.
Interest Reinvestment Benefit: The interest added to the principal amount is eligible for tax deduction under Section 80C, making it a valuable option for tax planning.

Types of NSC

NSC VIII Issue: This is the standard 5-year NSC, which provides interest that is compounded annually and paid only at maturity.

Who Should Invest in NSC?

Risk-averse individuals looking for a safe investment option.
Taxpayers looking to reduce taxable income under Section 80C of the Income Tax Act.
Long-term investors comfortable with a 5-year lock-in period and a fixed return.
Small investors seeking an affordable and low-risk investment option, with a minimum investment of ₹100.

Pros of NSC

Government-Backed: The investment is backed by the Government of India, making it one of the safest options.
Tax Benefits: Investment in NSC qualifies for tax deductions under Section 80C.
Fixed Returns: NSC offers fixed returns, providing a predictable income over the investment period.
Compounded Interest: The interest is compounded annually, which maximizes returns.
Affordable: Start investing with just ₹100, making it accessible for all income groups.

Cons of NSC

Taxable Interest: The interest earned is taxable, which can reduce the overall returns depending on your tax bracket.
Liquidity: NSC has a lock-in period of 5 years, and early withdrawal is not allowed except in cases of death.
Interest Paid at Maturity: You will not receive periodic interest payments; it’s only paid out at maturity.

How to Buy an NSC?

You can purchase NSC at any Post Office across India.
Some Post Offices also provide the facility to buy NSC online through authorized portals.
To purchase, you need to provide KYC documents like Aadhar card, PAN card, and passport-sized photographs, address and identity proof (as per KYC norms).

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