National Savings Certificate (NSC) – What is It? How to Purchase?

Last updated: July 2026

The National Savings Certificate (NSC) is a fixed-income savings scheme offered by Indian post offices. It is backed by the Government of India, which makes it one of the safest ways to grow your money. Because it also cuts your tax bill under Section 80C, it is popular with conservative, first-time, and long-term savers alike. This guide explains what the scheme is, how it works, its interest rate, and its tax benefits.

What is National Savings Certificate (NSC)?

NSC is a government-backed savings bond sold at post offices. You invest a lump sum, lock it in for five years, and receive your money with interest at the end. The scheme suits people who want guaranteed returns with almost no risk. Since it carries a sovereign guarantee, your capital is safe regardless of market swings.

NSC Interest Rate (2026)

The scheme currently pays 7.7% per annum. The Ministry of Finance reviews this rate every quarter, so it can change for new buyers over time. Two points make it attractive:

• The rate is locked at purchase. If you buy today at 7.7%, you keep 7.7% for the full five years, even if the government revises the rate later.
• Interest is compounded annually but paid at maturity. Each year’s interest is added to your principal and earns interest itself, and you receive the full amount at the end of year five.

Maturity example: Invest ₹1,00,000 today at 7.7% compounded annually. After five years it grows to about ₹1,44,900 — roughly ₹44,900 in interest, with no market risk.

Features of the certificate

• It has a fixed tenure of five years.
• The interest rate is set by the Ministry of Finance and can change from quarter to quarter.
• The minimum investment is ₹1,000, in multiples of ₹100, with no upper limit.
• Returns are compounded annually and paid only at maturity.
• It can be pledged as security or collateral for loans from banks and major NBFCs.
• You can name anyone from your family, including a minor, as a nominee.

Advantages of Investing in the scheme

• It offers a tax deduction of up to ₹1.5 lakh a year under Section 80C of the Income Tax Act, 1961.
• It is available at every post office in India.
• At 7.7%, its rate is among the highest for guaranteed fixed-income options.
• A sovereign guarantee keeps the risk extremely low.
• The holding can be transferred to a family member if the holder passes away.
• You can start with just ₹1,000, so almost anyone can use the scheme.

How to Invest in the scheme

You can buy the certificate at any post office in four steps:

• Fill in the application form, available at post offices and online.
• Carry it, with self-attested copies of your KYC documents, to a post office and submit them.
• Pay the amount you want to invest by cheque or cash.
• Collect the printed certificate once it is processed.

How to Apply for NSC Online

You can also apply online in two ways:

• India Post Payments Bank: the official platform, accessible through its website or app.
• Authorised banks: some banks also offer the scheme online — check with yours.

Through India Post net banking, the steps are:

• Log in to Department of Posts (DOP) net banking.
• Under General Services, select Service Requests.
• Click New Request and choose NSC Account – Open an NSC Account.
• Enter the amount and pick the debit account linked to your Post Office Savings Account.
• Read and accept the terms and conditions.
• View and download the deposit receipt.

NSC Eligibility

You can invest if you meet these conditions:

• You are an Indian citizen.
• There is no age limit.
• You can hold it jointly with another adult.
• You can invest on a minor’s behalf.

Trusts and Hindu Undivided Families (HUFs) are not eligible.

Documents Required

• A completed application form
• A passport-size photograph
• Identity proof (PAN card, passport, driving licence, voter ID, or government ID)
• Address proof (passport, electricity or telephone bill, bank statement, or a post-office ID)

Tax Benefits

The amount you invest qualifies for a deduction of up to ₹1.5 lakh a year under Section 80C. For the first four years, the interest is reinvested, so it also counts toward the 80C limit. The interest paid in the fifth year is not reinvested, so it is taxable at your income-tax slab rate.

NSC vs PPF vs Tax-Saver FD

All three save tax under Section 80C, but they differ on returns, lock-in, and how interest is taxed.

Who Should Invest in NSC?

The scheme fits you if you:

• want guaranteed, government-backed returns with no market risk;
• need a Section 80C deduction but prefer a shorter, five-year lock-in than PPF;
• are a first-time or conservative saver looking for a simple product; or
• want a safe anchor for a balanced portfolio.

Since there is no age limit and you can start with ₹1,000, it works for savers at almost any stage of life.

Transfer of the Certificate

You can move your holding to another post office without losing the interest earned. Collect Form NC-32, fill it in, and submit it to the post office that issued the certificate. To transfer it to another person, submit Form NC-34 to the original post office — but this is allowed only once during the five-year term.

Premature Withdrawal

The scheme is designed to be held for the full five years, so early exit is limited. It is allowed only in these cases:

• the holder passes away before maturity;
• a court of law orders the withdrawal; or
• a pledgee who is a Gazetted Government Officer forfeits the holding.

With a sovereign guarantee and steady returns, it remains a sensible, low-risk part of a balanced portfolio.

Is NSC Interest Taxable? TDS and the Reinvestment Benefit

The interest on your National Savings Certificate is taxable under “Income from Other Sources,” but two points work in your favour:

• No TDS: unlike a bank fixed deposit, no tax is deducted at source on the interest — you simply declare it when filing your return.
• Reinvested interest qualifies for 80C: the interest earned each year is reinvested into the certificate and, for the first four years, counts as a fresh Section 80C deduction. Only the final year’s interest is taxable without a matching deduction.

If you are weighing this scheme against other tax-savers, you can project returns with a PPF calculator and compare the tax treatment before you invest.

FAQs

Is it possible to invest with just ₹1,000?

Yes. The minimum is ₹1,000, in multiples of ₹100, and there is no maximum limit.

Can certificate holders change their nominees?

Yes. Submit Form 3 to change or cancel a nominee. The process carries a small fee of ₹5.

Can people get a loan against their holding?

Yes. You can pledge it as collateral. Most banks, government bodies, and NBFCs accept it as security.

What is the current NSC interest rate?

It is 7.7% per annum, compounded annually and paid at maturity. The rate is fixed at the time of purchase for the full five-year term.

Is NSC better than PPF?

It depends on your goal. It pays slightly more (7.7% vs 7.1%) and locks in for only five years, but its interest is taxable. PPF locks in for 15 years but its interest is fully tax-free.