National Savings Certificate

Interest rate6.8%
Minimum deposit₹ 100
Maximum depositNo upper limit restrictions
Investment tenure5 years
Offered byBanks and Post offices

National Savings Certificate (NSC) Interest Rate and Tax Saving

There are numerous investment options available to invest his/her money. National Savings Certificate is an investment tool that is a low-risk, tax-saving, and fixed income instrument for investors. NSC is a savings bond scheme backed by the Government of India and provides an investment option that induces confidence in the investor as it is low-risk also providing income tax benefit under Section 80C. In this article, we will discuss more on the National Savings Certificate Interest rate, eligibility, features, Tax Benefit, Taxation, etc.

What is National Savings Certificate (NSC)?

The NSC is a capital protection scheme that provides a guaranteed interest rate per annum. This can be comparable to other investment options like Public Provident Fund, and Post Office FDs. This scheme is one of the best tax saving options for small to mid investor who does not want to take a lot of risks, however, this investment cannot beat inflation and this makes it a little less desirable for investors. The maximum amount that you can invest is none but the tax benefit is Rs. 1.50 Lakh under Section 80C of Income Tax Act.

NSC Rate of Interest

NSC interest rate depends on whether the scheme has matured or not and also whether the scheme is prematurely withdrawn. The rate of interest rate provided as per the maturity period is listed below-

NameTenureRate of InterestCompounding Frequency
NSC 8 Issue5 years6.80%(2020-21)Half-yearly
NSC9 Issue10 years6.80%(2020-21)Half-yearly

The following table is the interest rate applicable on premature withdrawal of NSC-

Time of WithdrawalInterest Applicability
Withdrawal before 1 yearNo interest
Withdrawal after 1 yearInterest offered at the rate applicable then

Historic NCS Interest Rate

National Savings Certificate interest rate is regulated by the Ministry of Finance and therefore is decided by the Finance Minister. The applicable NSC interest rate for Q1 FY 2020-21 (April to June) is 6.8%. Interest earned from NSC has compounded annually but payable only at maturity. The following are the historic rates of interest for the NCS-

YearQuaterInterest Rate

Eligibility of NSC

The following are the eligibility for buying NSC-

  • Any individual with Indian Citizenship can apply for NSC and will be eligible for buying NSC
  • Non-residence Indians cannot buy new NSC, however, if they have bought NSC before becoming NSC then they can hold NSC till maturity
  • NSC is for individuals and cannot be bought by HUF, Trusts, or any organization, etc.

Who Should Investment in NSC?

Just like Public Provident Funds (PPF) and FDs, NSC provides guaranteed returns along with safe investment. This scheme is for individual Indian residents and cannot be purchased by an organization, company, HUF, etc. This scheme also saves tax up to 1.50 lakhs under the Income Tax Act, by investing in NSC you can save tax but this investment does not beat the inflation rates. So, it is only recommended for those who want to save tax and invest money that can provide gradual returns with secured capital investment.

Before investing make sure you calculate the return using an FD calculator or RD calculator

Benefits of National Savings Certificate (NSC)

The following are the list of benefits that an investor can observe while investing in the NSC scheme-

Interest rate

The interest rate provided by this scheme is fixed annually meaning an investor will get a guaranteed regular income on the investment. Currently, the interest rate of NSC is 6.8% per annum and it is revised by the government each quarter.

Tax Benefit

It is one of the biggest benefits the NSC scheme has to offer, it provides tax benefits on the principal amount up to 1.50 Lakhs annually for its subscribers under the Income Tax Act.


The maturity period of the NSC is of 5 years with the option to withdraw before the Maturity Period but, it will not yield any benefit and any capital gain will be treated as Short Term Capital Gain (STCG), therefore, it will be taxed based on your slab.

Investment Flexibility

You can start investing in NSC with a minimum amount of Rs. 1000/- only and can add in multiples of 100 thereafter with no upper limit.


Anyone with a bank or Post Office account can buy NSC. Earlier, the National Security Certificate was issued as a physical document but now it is issued via Internet Banking called e-mode. Post Office, however, uses a passbook method to issue the NSC.

Loan Collateral

You can present NSC as collateral against which you will be eligible for a loan. In such a case, the NSC will be transferred to the bank until the Loan tenure is finished.


Everyone knows the power of compounding on your investments. NSC is a compounding asset meaning the interest earned on your investment will be reinvested but, it can only be withdrawn after the maturity period.

Corpus or Maturity Tax

There is no Tax Deduction on Source (TDS) concept used while dealing with NSC. Any tax that you have to pay will be the income tax, based on the slab that you belong to.

Premature Withdrawl

One can exit the scheme under few circumstances like a court order, death of the investor, or forfeiture by a pledgee who is a Gazetted Government Officer for it.


Any member of the family including minors can be the nominee of the NSC. If a sudden event happens and the investor demises, the nominee of the investor can inherit the NSC.

How can you Buy NSC?

Earlier NSC can be bought as a Printed certificate from banks and Post Offices but now w.e.f 01 July 2016 the certificate can be bought as an e-mode or a Passbook Mode. For buying NSC, you need an internet banking facility on your account to buy this scheme online. It can be bought by an investor for self or on behalf of a minor or with another adult as a joint account. The following are the list of banks that provides you an option to buy NSC scheme online-

  • State Bank of India
  • Punjab National Bank
  • Bank of Baroda
  • Canara Bank
  • Union Bank of India
  • Indian Bank
  • Jammu & Kashmir Bank
  • Bank of India
  • Central Bank of India
  • Indian Overseas Bank
  • UCO Bank
  • Bank of Maharashtra
  • Punjab and Sind Bank
  • India Post Payments Bank
  • National Securities Depository Limited Payments Bank
  • HDFC Bank
  • Axis Bank
  • ICICI Bank

You can also fill the application offline and submit it to the nearest post office branch or a bank branch. The document for opening an account under NSC is the website.

Documents Required for Buying National Savings Certificate

The following are the list of documents required for buying a National Savings Certificate-

  • The NSC application form
  • Investors to provide an original identification proof such-
    • Passport
    • Permanent Account Number (PAN) Card
    • Voter ID
    • Driving license
    • Senior Citizen ID, or Government ID for verification.
    • Photograph.
  • Address proof like electricity bill, Passport, telephone bill, bank statement along with a cheque

Comparing NSC with Other Tax-Saving Investments

There are various similar long-term investment schemes like Public Provident Funds, National Pension Scheme, Fixed Deposit, Sukanya Samridhi Yojana and more. National Security Certificate is a tax-saving scheme, therefore comparing it with other tax-saving investments can help us in understanding how well the investment could be. Let us compare the NSC with other Tax investments-

InvestmentInterestLock-in PeriodRisk Profile
NSC7.9%5 yearsLow-risk
ELSS funds12% to 15%3 yearsMarket-related risks
PPF7.9% 15 yearsLow-risk
NPS12% to 14%Till retirementMarket-related risks
FD7% to 9%5 yearsLow-risk

FAQ Related to NSC

What are the NSC certificate denominations?

National Savings Certificates can be issued in denominations of Rs. 100, Rs.500, Rs. 1000, Rs. 5000 and Rs.10,000  thereafter the investor can buy NSC in the multiple of 100.

What are the income tax benefits of NSC?

Investments in NSC offer tax benefits of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act 1961. At the time of maturity, the interest earned will not be taxed on TDS, however, the capital gains on your investment will be treated as income and therefore, you will have to pay tax on that based on Income Tax Slab

How many years does it take for the NSC to double?

The current rate of interest on NSC is 6.8% and at this rate, your investment will not be doubled as the maturity period is only 5 years. If it were to be of more than five years then your investment could double.

What is the rate of interest on NSC in the post office in 2020?

The rate of interest on NSC for the First Quarter (April to June) 2020 is 6.8%.

Can NSC be encashed before its maturity?

Yes, you can encash NSC before its maturity but only in case of the investor’s sudden demise or if the court issues an order regarding the same.

How many NSCs can one buy?

There is no maximum limit to the number of NSCs that one can buy. The minimum amount required for an NSC investment is Rs. 1000 and thereafter multiples of Rs. 100/-