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NSC (National Savings Certificate): Eligibility, Interest Rate & Tax Saving Benefits

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November 22, 2023


What’s Inside

When it comes to parking your funds, there are several investment options available in India. The National Savings Certificate scheme is one of India's most popular small savings schemes. Tailored for low-risk investors, the NSC scheme offers many benefits, including a competitive interest rate and tax deductions. In this article, we explore these aspects of NSCs in detail. 

What is NSC?

National Savings Certificate or NSC is a tax-saving investment option introduced by the Indian government to promote small and medium savings among Indians. To this end, the National Savings Certificate scheme accepts investments starting from only Rs. 1,000 without an investment upper cap. NSCs are available at all post offices and easily accessible to all Indians.

Post the discontinuation of NSC IX, which came with a 10-year tenure, investors can now park funds in the National Savings Certificate scheme for five years and earn interest on the same while qualifying for tax benefits. Bringing investors additional investment perks, NSCs also qualify as collateral for secured loans and come with nomination and transfer benefits. 

NSC Eligibility 

As per NSC rules, individual and joint NSC (up to 3 members) are allowed. Moreover, National Savings Certificate (NSC) investments can be made by guardians on behalf of people of unsound minds or minors over ten years of age. Apart from these preliminary rules, the following eligibility rules apply to the National Savings Certificate scheme:

  • All resident Indian citizens can apply for NSC.
  • There is no age cap for eligibility. 
  • Trusts, Hindu Joint Families (HUFs), and private and public companies cannot apply for NSC.
  • Kartas of HUF can make NSC investments in his own name.
  • Non-resident Indians cannot invest in NSC. However, if you already hold an NSC certificate before becoming an NRI, you can enjoy its maturity benefits on a non-repatriable basis. 

NSC Interest Rate

The Indian Finance Ministry determines NSC interest rates and then communicates it to the general public. The current interest rate for the National Savings Certificate scheme is 7.7%. While the interest on your NSC investment is compounded annually, the actual interest is credited at maturity. 

Until 2016, NSC interest rates were revised yearly. However, starting from 2016, NSC rates are announced every quarter. Here’s an overview of NSC interest rates over the last ten quarters:


Interest rate

FY 2023-24 (Q2)


FY 2023-24 (Q1)


FY 2022-23 (Q4)


FY 2022-23  (Q3)


FY 2022-23  (Q2)


FY 2022-23 (Q1)


FY 2021-22 (Q4)


FY 2021-22 (Q3)


FY 2021-22(Q2)


FY 2021-22 (Q1)


NSC Tax Benefits

The National Certificate Scheme is a prudent tax-saving investment option for those looking to reduce their outstanding tax liabilities while earning decent returns. Here’s an overview of the NSC tax benefits:

  • U/s 80C, you can claim up to Rs. 1.5 Lakhs as a tax deduction on the principal amount invested in NSC.
  • The interest earned on your NSC investment (for the first four years) gets reinvested and qualifies for tax benefits under the overall limit of Rs. 1.5 Lakhs.
  • The interest accrued on your investment in the fifth year is not reinvested and, thus, qualifies for taxation as per your applicable income tax slab.  

Summing It Up 

As you can conclude from its specifics, the National Savings Certificate scheme best suits investors looking for a low-risk, fixed-income investment avenue offering decent returns. Thanks to their stable, tax-efficient returns, NSCs offer a good hedge for your portfolio. However, if you’re looking for inflation-beating returns, you can diversify your portfolio with equity mutual funds. 

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Frequently Asked Questions

1. Who is eligible to purchase National Savings Certificates (NSC)?

All Indian citizens are eligible for the National Savings Certificate Scheme. NSCs can also be held individually or jointly by guardians of minors or those of unsound mind. Only NRIs, trusts, and HUFs are excluded from the NSC eligibility checklist. 

2. What is the current interest rate on National Savings Certificates?

Currently, the government announced a 7.7% interest rate on NSCs. 

3. Are National Savings Certificates tax-deductible?

Under NSC, the principal sum invested qualifies for tax deductions u/s 80C. The interest earned on the investment is also tax deductible (under the Rs. 1.5 Lakh ceiling) for the first four years. Interest earnings are taxed as per your tax slab in the fifth year. 

4. What is the maturity period of National Savings Certificates?

National Savings Certificates come with a 5-year maturity period. However, you can continue the scheme even after this maturity date. 

5. Can National Savings Certificates be transferred or pledged as collateral?

Yes. You can transfer NSCs from one post office branch to another in the event of relocation. NSCs can even be transferred from one person to another. Such transfers don’t affect the accrual of interest on the investment. Moreover, you can even pledge them as collateral with banks and NBFCs to acquire loans.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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