National Savings Certificate Benifits

National Savings Certificate

The National Savings Certificate is a fixed investment scheme. It is open to any post office. A Government of India initiative, it is a savings bond that encourages peoples– mainly small to mid-income investors to invest while saving on income tax. The fixed-income instruments like Public Provident Fund and Post Office FDs, this scheme too is a secure and low-risk product. You can buy the nearest post office in your name, for a minor or with another adult as a joint account. They come with two fixed maturity periods are 5 years and 10 years. No maximum limit on the purchase of NSCs, but investments of up to Rs 1.5 lakh can earn you a tax break under Section 80C of the Income Tax Act. The certificates earn a fixed interest, currently at a rate of 8% per annum. Below provide the National Savings Certificate Benefits all details.


The interest rate on the NSC is guaranteed. Currently, the interest rate is 8.0 percent on the five-year option, compounded annually. Since the interest rate on the NSC is revised every quarter as per the prevailing government bond rates. However, once you have invested in the NSC, the rate applicable at that time will be applicable throughout the tenure of your scheme investment.

Features and Benefits of NSC

Fixed income: Presently, you get guaranteed returns (8% annual interest) and can enjoy a regular income.
Types: The scheme originally had two types of certificates – NSC VIII Issue and NSC IX Issue. The Government discontinued NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.
Tax saver: As a government-backed tax-saving scheme, you can invest for up to Rs 1.5 lakh to claim the benefits of 80C deductions.
Start small: You can invest as small as Rs. 100 (or multiples of 100) as an initial investment, and increase the amount when feasible.
Interest rate: Currently, the rate of interest is 8%, which the government revises every quarter. It gets compounded annually but will be payable at maturity.
Maturity period: There are two maturity periods to choose from one is 5 years and the other for 10 years.
Access: You can purchase this scheme from any post office by submitting the necessary documents and doing the KYC process. It is easy to transfer the certificate from one PO to another too.
Loan collateral: Banks and NBFCs accept NSC as a collateral or security for secured loans. To do this, the concerned postmaster should put a transfer stamp to the certificate and transfer it to the bank.
Power of compounding: Interest you earn on your investment gets compounded and reinvested by default, though the returns do not beat inflation.
Nomination: Investors can nominate a family member (even a minor) so that they can inherit it in the unfortunate event of the investor’s demise.
Corpus after maturity: Upon maturity, you will receive the entire maturity value. Since there is no TDS on NSC payouts, the subscriber should pay the applicable tax on it.
Premature withdrawal: Generally, one cannot exit the scheme early. However, they accept it in exceptional cases like the death of investor or if there is a court order for it.

Eligibility of NSC

Eligibility: You need to be a resident Indian to buy the NSC
Entry age: No age is specified for account opening
Minimum Investment: Rs 100; Certificates are available in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000
Interest: 8.0 percent compounded annually for the period July-September, 2019. Interest rates are subject to revision every quarter.
Tenure: Five years
Nomination Facility: Available

Account-holding categories

  • Individual
  • Joint
  • Minor through the guardian