National Savings Certificate (NSC) Interest Rate, Post Office, Calculator, Benefits

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National Savings Certificates (NSC) are a popular investment scheme backed by the Government of India that offers a safe and secure investment option with attractive returns. NSC is a fixed-income investment scheme that allows individuals to invest a minimum amount and earn interest on their investments over a fixed term. Investors can easily invest in NCS via post offices, banks, or online.

National Savings Certificates (NSC)
National Savings Certificates (NSC)

NSCs, come in two different denominations: 100 and 500 rupees. Up to Rs. 1.5 lakh every fiscal year in multiples of these denominations, may be purchased. The certificates can be bought jointly by two adults and are issued in the names of specific individuals. The interest on NSCs is compounded yearly and has a maturity of five or ten years.

In this article, we’ll take a closer look at National Savings Certificates (NSC), including their features, advantages, disadvantages, benefits, and how they work. We’ll also provide insights into the interest rates and returns offered by NSC, as well as the tax benefits associated with this investment scheme.

Consider reading: 13 Safe investment options in India

National Savings Certificates (NSC) Key Details

Investment typeFixed income investment scheme
Investment amountMinimum investment of Rs. 1,000
Investment tenure5 years and 10 years
National Savings Certificate Interest rate7.7 % p.a.
Interest Rate Revised on1st April 2023
Interest paymentAnnually
Tax benefitsTax deduction under Section 80C of the Income Tax Act
Maturity amountInvestment amount + accumulated interest
LiquidityPremature withdrawals are allowed with a penalty
RiskGovernment-backed, low-risk investment
National Savings Certificates (NSC) Key Details

National Savings Certificates (NSC) is a safe and secure investment option for individuals looking for a low-risk investment with attractive returns. It offers tax benefits under Section 80C of the Income Tax Act, making it a popular investment option for those looking to save on taxes.

Consider reading: Best Short-Term Investment Options in India

Key Advantages of National Savings Certificates (NSC)

There are several advantages to investing in National Savings Certificates (NSCs) in India:

  1. Fixed-rate of return: NSCs offer a fixed rate of return, which is currently 6.8% per annum. This rate is generally higher than the interest rates offered by banks on fixed deposits.
  2. Tax benefits: Investments made in NSCs are eligible for tax deductions under Section 80C of the Income Tax Act. This means that the investments made in NSCs can be claimed as deductions while computing the taxable income.
  3. Convenient: NSCs can be purchased from any post office in India, and can also be easily transferred from one post office to another or from one person to another.
  4. Safe and secure: NSCs are a safe and secure investment option as they are issued by the Indian government.
  5. Flexibility: NSCs are available in two denominations (Rs. 100 and Rs. 500) and can be purchased in multiples of these denominations, up to a maximum of Rs. 1.5 lakh per financial year. They have a maturity period of 5 or 10 years, and the interest is compounded annually.
  6. Nomination facility: NSCs have a nomination facility, which means that an investor can nominate a person to receive the certificate in the event of their death. This ensures that the investment is passed on to the nominated person smoothly and efficiently.
  7. Partial withdrawal: Investors can partially withdraw their investment in NSCs after the completion of 3 years from the date of issue. However, a penalty will be charged for such withdrawals.

Key Disadvantages of National Savings Certificates (NSC)

While National Savings Certificates (NSCs) have several advantages, there are also some disadvantages to consider:

  1. Low liquidity: NSCs are not liquid investments, which means that they cannot be easily converted into cash before the maturity period. If an investor needs to withdraw their investment before the maturity period, they will have to pay a penalty.
  2. Low returns: The rate of return on NSCs is generally lower than other investment options such as mutual funds or stocks. This means that investors may not be able to earn as much money on their investment as they would with other options.
  3. No provision for premature encashment: There is no provision for premature encashment of NSCs, which means that investors cannot withdraw their investment before the maturity period.
  4. Interest rates may fluctuate: The interest rate on NSCs is reviewed by the government every quarter, which means that it may fluctuate over time. This can affect the overall return on investment.
  5. Risk of loss or damage: There is a risk of loss or damage to the physical NSC certificates, which can be a problem for investors who do not have a secure place to store them.

How to Invest in National Savings Certificates

To invest in National Savings Certificates (NSCs) in India, follow these steps:

  1. Visit a post office: NSCs can be purchased from any post office in India.
  2. Fill out an application form: You will need to fill out an application form and provide your personal details, including your name, address, and PAN card number.
  3. Choose the denomination and number of certificates: NSCs are available in two denominations: Rs. 100 and Rs. 500. You can purchase them in multiples of these denominations, up to a maximum of Rs. 1.5 lakh per financial year.
  4. Choose the maturity period: NSCs have a maturity period of 5 or 10 years. Choose the period that best suits your investment goals.
  5. Make the payment: You can make the payment for your NSCs by cash, cheque, or demand draft.
  6. Receive your certificates: Once the payment has been made, you will receive your NSC certificates. It is important to keep these certificates in a safe and secure place.
  7. Make any additional investments: You can make additional investments in NSCs at any time by visiting a post office and filling out a new application form.

It is important to note that NSCs are not liquid investments and cannot be easily converted into cash before the maturity period. If you need to withdraw your investment before the maturity period, you will have to pay a penalty. It is also important to remember that the interest rate on NSCs is reviewed by the government every quarter, which means that it may fluctuate over time.

Consider reading: Post Office Schemes and Interest Rate Table

How to Fill Out an National Savings Certificate (NSC) Application Form?

o successfully complete an NSC application form, follow these steps:

  1. Obtain the Application Form:
    • You can get the NSC application form at any post office or bank branch that offers NSCs.
    • Alternatively, download the form from the Ministry of Finance or India Post website.
  2. Fill Out Personal Details:
    • Provide your full name, address, and contact information in the designated section.
  3. Select the NSC Type:
    • Choose between NSC VIII Issue (5-year maturity period) and NSC IX Issue (10-year maturity period).
  4. Specify Investment Amount:
    • Indicate the amount you wish to invest in NSCs, noting that the minimum investment is INR 100 and there is no upper limit.
  5. Choose Payment Mode:
    • Select your payment method – cash, cheque, or demand draft. For cheque or demand draft payments, provide details like bank name, branch, and account number.
  6. Nominee Details:
    • Nominate a person to receive the NSC amount in case of your demise, including their name, relationship to you, and contact information. Having a nominee ensures a smooth claim process.
  7. Sign the Form:
    • Sign the form to affirm that all provided information is accurate. If the NSC is for a minor, the guardian must sign.
  8. Submit Form and Supporting Documents:
    • Along with the completed form, submit necessary documents (like identity and address proof) to the post office or bank.

Additional Notes:

  • Document Requirements: The requirements might vary slightly based on the specific post office or bank.
  • Verification: Ensure all details are correct and legible to avoid processing delays.
  • Receipt: After submission, ensure you receive a receipt or acknowledgment for your application.
  • Follow-up: If necessary, follow up with the post office or bank for the status of your application.

By carefully following these steps, you can smoothly complete the NSC application process.

Documents Required for National Savings Certificate (NSC)

When you’re looking to purchase NSC Certificates, it’s important to have the necessary documents ready. Here’s a list of the required documents for purchasing NSC:

  1. Identity Proof:
    • You must submit an original form of identity proof for verification.
    • Acceptable forms of identity proof include a driving license, voter ID card, PAN card, or passport.
  2. NSC Application Form:
    • Obtain and complete the NSC application form available at a post office.
  3. Payment Method for NSC Purchase:
    • NSCs can be purchased using cash, cheque, or demand draft.
    • If using a cheque or demand draft, it should be made in favor of the postmaster of the respective post office.
  4. Witness Signature:
    • The signature of a witness is required to complete the purchase formalities.
  5. Proof of Address:
    • Provide a valid address proof document such as a utility bill, bank statement, or government-issued address document.
  6. Photograph:
    • A recent passport-size photograph may be required.

For Online Purchases:

  • If you’re purchasing NSC online, typically through a post office or bank account, you may not need to separately provide these documents, as they would have been submitted at the time of account opening.

Additional Points:

  • Original Document Verification: Ensure to carry original documents for verification even if photocopies are submitted.
  • Completeness of Application: Double-check the application form for completeness and accuracy to avoid processing delays.
  • Updates and Variations: Keep in mind that requirements may vary slightly between different post offices or banks, so it’s advisable to confirm with the specific post office or bank where you plan to purchase the NSC.

How to Buy National Savings Certificates (NSC) Online

You can get National Savings Certificates (NSC) online in two ways:

  1. Post Office: If you have a post office savings account then you can log in to your post office savings account and buy NSC online.
  2. Public Sector Banks/ Major Private Sector Banks: If you have a savings bank account in any public sector banks or major private sector banks like ICICI, HDFC, or Axis then you will be able to buy NSC directly by using Internet banking services.

How to Link National Savings Certificate (NSC) with Aadhaar

Linking your National Savings Certificate (NSC) with your Aadhaar number offers convenience in managing your investments. Here’s how you can do it:

1. Online Process:

  • India Post Website: Visit the official India Post website.
  • NSC and Aadhaar Details: You’ll need to enter your NSC number and Aadhaar number.
  • Verification: Follow the prompts for verification. This may involve OTP (One-Time Password) verification using the phone number linked to your Aadhaar.

2. Offline Process:

  • Visit a Post Office or Bank: Go to the nearest post office or bank branch where NSCs are available.
  • Documentation: Bring your original NSC certificates and a photocopy of your Aadhaar card.
  • Submission: Submit these documents to the concerned authority at the post office or bank for linking.

Important Notes:

  • Optional Process: Remember, linking NSC with Aadhaar is not mandatory but beneficial for easier online access and management of your NSC accounts.
  • Record Keeping: Post linking, ensure you receive a confirmation or acknowledgment receipt.
  • Verification: Keep your registered mobile number with Aadhaar updated, as it may be required for OTP-based verifications.
  • Data Privacy: Ensure that the details provided online or offline are through secure and official channels to protect your personal information.

Staying up-to-date with the linking of your National Savings Certificate (NSC) and Aadhaar can streamline the encashment process and enhance the ease of managing your investments.

National Savings Certificate Calculator

Use the National Savings Certificate Calculator below to calculate your investment in NSC

Consider reading: Top 10 best investment options in India

NSC vs ELSS Funds vs PPF Vs NPS vs FD

Here are the key differences between NSC vs ELSS Funds vs PPF Vs NPS vs FD:

InvestmentInterest rateLock-in PeriodRisk Profile
NSC7.7% p.a.5 yearsLow-risk
ELSS fundsMarket-linked, historical returns show
12% to 15% p.a.
3 yearsMarket-related risks
PPF7.1% p.a.15 yearsLow-risk
NPSMarket-linked, historical returns show
8% to 10% p.a.
Till retirementMarket-related risks
FD4% to 6% p.a.5 yearsLow-risk
ULIPMarket-linked, historical returns show
8% to 10% p.a.
5 yearsMarket-related risks
NSC vs ELSS Funds vs PPF Vs NPS vs FD

Consider reading: Public Provident Fund (PPF) Latest Interest Rates and Details

How to Show National Savings Certificate (NSC) Interest in Income Tax

You can show the National Savings Certificate (NSC) interest earned in one of the following ways while filing an ITR:

  • You can show the interest earned from NSC under ‘Income from Other Sources’.
  • You can claim a deduction for interest earned from NSC, but you don’t show it as income. In this case, you can consider the entire interest income you have earned over the years as income in the last year.
  • Don’t claim the interest earned as a deduction or income. In this case, all the interest earned will be counted as ‘Income from Other Sources’ in the last year. Only the first four years’ interest will be counted as a deduction.

NSC or KVP? Which is better?

The National Savings Certificate (NSC) and Kisan Vikas Patra are two schemes that operate very differently and have very different goals. Here is a comparative table to illustrate this distinction.

EligibilityResident Indians onlyOnly Resident Indians and Trusts
Minimum Deposit AmountRs.100Rs.1,000
Maximum Deposit AmountNo limitNo limit
Interest Rate (Q4 of FY 2022-2023)7.7% p.a.7.5% p.a.
Investment Tenure5 years120 months
Premature WithdrawalNot allowedOnly after 30 months from the date of investment
Tax BenefitsAvailableNot Available
Loan FacilityAvailableAvailable
How to purchaseAt Post Office branchesAt Post Office and participating bank branches

Consider reading: Kisan Vikas Patra Latest Interest Rate and Details

How to Encash / Redeem NSC Certificates After Maturity?

To encash National Savings Certificate (NSC) certificates upon maturity, follow these steps:

  1. Visit the Post Office or Bank:
    • Go to the nearest post office or bank branch that deals with NSCs.
    • It’s essential to visit in person for the encashment process.
  2. Submit NSC Certificates:
    • Present your original NSC certificates.
    • Carry along necessary supporting documents, typically including proof of identity and address (like Aadhaar card, PAN card, or driving license).
  3. Fill Out the Encashment Form:
    • Obtain an encashment form from the post office or bank.
    • Fill in the required details, which usually include your name, address, and bank account information where the funds will be transferred.
  4. Submit the Encashment Form and Documents:
    • Hand in the completed encashment form along with the NSC certificates and the supporting documents.
  5. Receive the Encashed Amount:
    • After verification and processing, the encashed amount, including the principal and the accumulated interest, will be transferred to your specified bank account.

Important Considerations:

  • Premature Encashment Charges: Be aware of any potential charges or penalties for premature encashment, if applicable.
  • Check Current Rules: Since rules and processes can change, it’s advisable to check the latest guidelines with the post office or bank.
  • Tax Implications: Understand the tax implications, if any, on the interest earned from NSCs at the time of encashment.
  • Timely Encashment: Aim to encash NSCs soon after maturity to avoid the continuation of interest accumulation under the existing terms.

By following these steps, you can smoothly encash your National Savings Certificate (NSC) certificates post-maturity, ensuring you reap the benefits of your investment.

How to Withdraw National Savings Certificate (NSC) Before Maturity

If you need to withdraw your National Savings Certificate (NSC) before its maturity period (5 or 10 years), be aware that certain conditions and penalties apply. Here’s how to proceed:

  1. Visit the Post Office or Bank:
    • Go to the nearest post office or bank branch authorized to deal with NSCs.
    • This process requires your physical presence.
  2. Submit NSC Certificates:
    • Present your original NSC certificates at the post office or bank.
    • Carry necessary supporting documents for identification and address verification, like Aadhaar card, PAN card, or driving license.
  3. Complete the Encashment Form:
    • Obtain and fill out the encashment form available at the post office or bank.
    • Include essential details like your name, address, and bank account information for the transfer of funds.
  4. Hand in the Encashment Form and Documents:
    • Submit the completed form along with your NSC certificates and supporting documents.
  5. Penalty for Premature Withdrawal:
    • Be prepared to pay a penalty for premature withdrawal. This penalty is generally a percentage of the principal amount and varies based on the NSC type and the time remaining until maturity.
    • The exact penalty rate and conditions can be confirmed at the post office or bank.
  6. Receive the Encashed Amount:
    • After processing, the encashed amount (principal minus the penalty) will be transferred to your bank account.

Important Considerations:

  • Understand Penalty Details: Ensure clarity on how the penalty is calculated and how much will be deducted from your investment.
  • Check for Exceptions: In some cases, like the death of the holder, exceptions to penalty clauses might apply.
  • Tax Implications: Be aware of any tax implications that may arise from premature withdrawal.
  • Process and Timelines: Inquire about the processing time and when you can expect the funds to be credited to your account.

Premature withdrawal from National Savings Certificate (NSC) should ideally be a last resort due to the penalties involved and the loss of accrued interest benefits. However, understanding these steps can make the process smoother if such a situation arises.

FAQs on National Savings Certificate (NSC)

What is the National Savings Certificate?

The National Savings Certificate (NSC) is a government-backed savings bond in India, aimed at small to mid-income earners. It offers a fixed return and can be opened at post offices. NSC is not only a secure investment option but also provides tax benefits under Section 80C of the Income Tax Act.

Is NSC better than FD?

Choosing between NSC and FD depends on your financial goals. NSC is typically more tax-efficient, as the interest earned is not subject to TDS and it qualifies for deductions under Section 80C. FDs might offer marginally higher pre-tax interest, but TDS can reduce the net returns, making NSC often a better choice for saving taxes.

Is NSC maturity tax free?

NSC maturity is not entirely tax-free. The interest earned on the National Savings Certificate is taxable at maturity, but it’s eligible for a deduction under Section 80C each year, which effectively defers the tax. Ensure proper declarations to benefit from the tax exemption on reinvested interest.

What will be 1 lakh NSC after 5 years?

Investing ₹1 lakh in NSC for 5 years at an annual interest rate of 7% yields a maturity value of ₹1,40,255. Use the NSC calculator for precise figures and to factor in any rate changes.

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