All you need to know about National Savings Certificate (NSC)

The avoidance of taxes is the only intellectual pursuit that carries any reward.

— JMKeynes

Payment of taxes is an important duty for every Indian citizen. It helps the governments to provide us with the best infrastructure and services. Having said that, paying taxes deprives a chunk of our gains. To prevent this, we normally choose saving schemes that allow tax deductions. Our topic of discussion is one such instrument that is known for its tax benefits: National Savings Certificate (NSC).

This is an instrument provided by the Government with the objective to encourage savings, allow tax exemptions, and ensure definite returns during retirement.

National Savings Certificate

Tax implications


The interest earned in the 5th year is not reinvested, hence do not receive tax exemptions, rather they are subjected to tax implications according to the current tax slab you fall into.

  • Under Section 80C, National Savings Certificate (NSC) provides tax deductions up to Rs. 1.5 lakhs limit.
  • The annual interest earned on NSC (for the first four years) receive tax exemptions because the interest earned is deemed to be reinvested.



A minor is eligible to open a NSC account, provided they are backed by a guardian.

  • Only Indian Residents are qualified to subscribe to NSC.
  • There is no age limit for opening a NSC account.
  • Account can be opened Individually or Jointly.
  • You can choose a nominee for your NSC account.



The National Savings Certificate is backed by the Government of India hence your capital is protected and your investment is almost risk free.

  • One can start investing with a minimum amount of Rs. 100 /-.
  • The various denominations available with NSC are: Rs.100, Rs.500, Rs. 1000, Rs. 5000, Rs. 10,000.
  • It offers one of the highest rate of returns among fixed-rate instruments.



You can access your funds in the form of loans, by borrowing against your NSC savings.

  • NSC comes with a lock-in period of 5 years.
  • Premature withdrawal is exercised only on the death of the account holder.
  • Withdrawals are permitted if one has received an order from the court.
  • NSC is transferable from one post office to another before maturity.

Interest Rate

  • Assured interest rate, which is revised every quarter (as per government bond rates).
  • Interest earned is compounded annually and paid only at maturity.
Period Interest Rate
Q3 FY 2018-198.0%
Q2 FY 2018-197.6%
Q1 FY 2018-197.6%
Q4 FY 2017-18
Q3 FY 2017-18
Q2 FY 2017-18
Q1 FY 2017-18


  • You required to fill the NSC application form at the post office.
  • You need to present your original identity proof at the time of account opening.
  • One can buy this certificate through cash or DD (demand Draft) in favour of the postmaster of the post office where you buy your NSC.

Where to buy?

National Savings Certificate can be bought at any head post office or general post office.

Hope this article describes all the features and benefits of buying the National Savings Certificate. Earning is important, but you reap its benefits only if you Save and Invest.

Invest Today, Secure Tomorrow!!

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