There are many different types of investment avenues in India. Based on your risk profile, you can choose any to invest in as per your needs. Post Office NSC Scheme, is one such investment instrument. It is a popular fixed return and low-risk investment. In this post, I will discuss all you need to know about National Savings Certificate (NSC).
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National Savings Certificate (NSC)
The NSC certificate is a tax saving investment scheme that you can open easily with any post office. A Government of India initiative, with the aim to encourage small to mid-income investors to invest while saving on income tax.
NSC is a fixed return and low-risk investment scheme and offered to all Indian residents. The NSC post office scheme comes with 5 years fixed maturity period. Being a secure and low-risk product, it is very popular among risk-averse investors.
Features & Benefits of NSC Certificate
Key features and benefits of the National Saving Certificate scheme are as follows:
1. You can purchase NSC from any post office at a fixed maturity period of 5 years.
2. The NSC interest rate is subject to change every quarter as per the Ministry of Finance declarations.
3. Currently, the post office NSC interest rate is 6.8%. Rs.1000/- grows to Rs.1389.49 after five years.
4. You can invest as low as Rs.1000 and in multiple of Rs.100, while there is no maximum limit.
5. NSC certificate is a government-backed tax-saving scheme. Deposits up to Rs.1.5 lakh qualify for deduction under section 80C of the Income Tax Act.
6. Any number of accounts can be opened under the post office NSC scheme.
7. Post Office NSC interest rate gets compounded annually but payable at maturity without any TDS deduction.
8. The account may not be prematurely closed before 5 years except in exceptional cases.
9. NSC certificate may be transferred from one person to another person in certain conditions.
10. It may be pledged or transferred as security for secured loans in Banks and NBFCs.
National Saving Certificate Interest Rate
Currently, the National Saving Certificate interest rate is 6.8% compounded annually but paid at maturity. Post Office NSC interest rate is subject to change every quarter as per Ministry of Finance declarations. The following are the historic rates of interest for the NSC post office:
| Period | Interest Rate |
| 4th Quarter FY 2021-22 | 6.80% |
| 3rd Quarter FY 2021-22 | 6.80% |
| 2nd Quarter FY 2021-22 | 6.80% |
| 1st Quarter FY 2021-22 | 6.80% |
| 4th Quarter FY 2020-21 | 6.80% |
| 3rd Quarter FY 2020-21 | 6.80% |
| 2nd Quarter FY 2020-21 | 6.80% |
| 1st Quarter FY 2020-21 | 6.80% |
| 4th Quarter FY 2019-20 | 7.90% |
| 3rd Quarter FY 2019-20 | 7.90% |
Who can invest in National Savings Certificates Post Office?
1. A single adult
2. Joint Account (up to 3 adults)
3. A guardian on behalf of a minor or on behalf of a person of unsound mind.
4. A minor above 10 years in his name.
Tax benefits of NSC investment
The NSC certificate is a tax-saving investment scheme backed by the Government of India. Investment in National Saving Certificate up to Rs.1.5 lakh qualifies for tax savings under Section 80C of Income Tax Act.
The interest earned on the deposits is treated as re-invested in NSC and qualify for a tax break as well. The interest generated annually is first added to the investor’s total income and then allowed as a deduction.
How to invest in National Saving Certificate Scheme
You can purchase an NSC certificate from any Indian Post Office by submitting the required KYC documents. Presently, you cannot purchase the National Saving Certificate online. Just follow the steps given below to invest in NSC.
1. Fill the NSC application Form. The form is available online as well as at all post offices. Click here to download.
2. Next submit self-attested KYC documents photocopies. Also, carry original documents for verification purposes.
3. Make the payment for the purchase of the certificate by cash or through cheque.
4. Once it is processed, you will be provided your NSC passbook from the post office.
Comparing NSC with other Investment Schemes
| Tax Saving Investment | Interest Rate | Lock-in Period | Risk Profile |
| NSC | 6.80% | 5 years | Low Risk |
| Public Provident Fund | 7.10% | 15 years | Low Risk |
| ELSS Funds | 12% to 15% | 3 years | Market Related Risk |
| Tax Saver FD | 5% to 7% | 5 years | Low Risk |
| National Pension Scheme | 8% to 10% | Till retirement | Market Related Risk |
Final Thoughts
I hope now you know everything about NSC. National Savings Certificate is one of the tax-saving investment schemes available under Section 80C of the Income Tax Act. If you are looking for a fixed return and low-risk investment, you can consider NSC scheme.
Note: This post was originally published on December 5, 2020 and has been completely updated for accuracy and comprehensiveness.
Also Read: How to invest in Direct Mutual Funds in India?
Also Read: SIP (Systematic Investment Plan) – A complete guide to SIPs in Mutual Funds