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National Savings Certificate: Eligibility, features and benefits

Do you constantly look for investment options offering stable returns at low risks? If yes, the Indian government’s initiatives in this direction will surely interest you. 

The government of India, in coordination with different ministries, has come up with various saving schemes for investors of all kinds. One such option is the National Savings Certificate. In today’s article, let’s dive deep into the intricacies of this scheme.

What is the national savings certificate scheme?

National Savings Certificate or NSC is a scheme introduced by the government in association with India’s Post Office Department. It is a fixed-income investment scheme that is backed by the government.

The scheme requires a low capital investment and can be purchased from any post office, making it an accessible option to all small and mid-sized investors. It is specifically meant for individual residents of the country.

The scheme matures in five years, making it an ideal choice for those looking at medium-term, stable investment options. During the early independence era, National Savings Certificates were one of the significant instruments promoted by the government to raise funds to run the country.

Also read: Insert <Kisan Vikas Yojana>

Details of the scheme

  • A maximum of three members can hold an NSC account jointly under this scheme.
  • The scheme requires a minimum investment of ₹1,000. The amounts invested must only be multiples of 100.
  • There is no constraint on NSC’s maximum limit for investment. An individual also has no constraints on the number of accounts one can open under the scheme.
  • NSC’s maturity period is five years. So, the government issues a new scheme once every five years.
  • The interest rate of NSC varies often. The government publishes such rates on the post office’s website. 
  • The National Savings Certificate is a valid collateral for loans. Investors can pledge the certificate for loans in banks and other financing companies.
  • NSC’s premature withdrawal is allowed only in the case of the death of the holders or by the court’s order. Otherwise, the scheme does not allow withdrawal or redemption until maturity.
  • Transferring the account from one holder to another is also allowed only in the case of the current holder’s demise or by the court’s order.

At present, NSC offers an interest of 7.7% compounded annually. The interest earned is payable at maturity.

Eligibility criteria

To be an eligible applicant under the National Savings Certificate scheme, one must satisfy the following conditions:

  • Must be an Indian resident
  • Must be above the age of 18
  • A guardian in case of minors or people of unsound mind
  • Must not invest in the capacity of a HUF member or an NRI

Benefits of NSC

  • One of the biggest attractions of the scheme is NSC’s tax benefits. The scheme is popular for its tax-saving feature. The amount invested in NSC is eligible for deductions under Section 80C, up to a maximum of ₹1.5 lakhs per year.
  • Since it is a government scheme, it is a no-risk investment. The interest rates go through a periodic revision, giving investors a regular and stable income source.
  • Investors reap the benefits of compounding since the interest earned is reinvested back until maturity.
  • The scheme has a medium-term, making it a liquid option as compared to other long-term investments.
  • The minimum capital outlay is as low as ₹1,000, making it accessible to small-scale investors, too.

How to invest in NSC?

  • To invest offline, investors can walk into any post office and pick up the application form.
  • Upon filling out the form and submitting the KYC documents, the application goes through verification.
  • Post the approval, investors can deposit the desired amount and collect the National Savings Certificate.

The application form can also be downloaded through the post office’s online portal. Once filled, it can be handed over to the nearest post office.

How to purchase NSC online?

  • Since 2016, the scheme has allowed investors to buy NSCs online. It requires investors to create Internet banking accounts on the Department of Post’s official portal.
  • Once the account is created, they can place a request under the ‘Service Request’ tab.
  • Select NSC under the list and enter the required details.
  • The certificate can also be downloaded online in an electronic format.


The National Savings Certificate scheme by the Indian government aims to provide small and medium-sized investors with an option to save money while also saving on taxes. It is a suitable investment avenue for all those looking at low-risk, stable returns for a medium term of five years. The tax benefit that comes along makes this an appealing investment option.


Is NSC better or KVP?

NSC and KVP are both government-backed saving schemes. The benefit of NSC over KVP is the tax benefit. Unlike KVP, NSC is eligible for 80C deductions. However, KVP is more suitable for those looking at short-term investments, as KVP allows early withdrawal.

Is NSC better than FD?

NSC is better than FD in terms of safety since NSC is entirely backed by the government. It is also more beneficial as compared to FD with respect to returns. Though FD offers higher interest, the returns are liable for TDS, making the end income less than NSC’s returns.

Is NSC tax-free?

No, NSC is not tax-free. The interest earned on NSC investments is taxable under “Income from other sources”. However, the interest earned is automatically reinvested in the scheme, making it eligible for tax deductions for the first four years, under Section 80C of the Income Tax Act.

Can I buy NSC from a bank?

Yes, NSCs can be bought from post offices or authorised banks. To buy NSC from banks online, one needs to have an internet banking account.

How can I withdraw my NSC maturity amount?

The original NSC certificate must be submitted to the post office, at the time of redemption, along with KYC documents. All the documents will be verified. Upon successful verification, the deposit amount will be credited to the investor’s bank account.

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