Issued by the Central Government, the National Savings Certificate or NSC scheme is a popular investment instrument that offers guaranteed returns. This secured investment scheme comes with a lock-in period of 5 years, and the interest on the amount invested is compounded annually and paid out only at maturity.
Any Indian citizen residing in India can invest in the NSC scheme with a minimum deposit of Rs. 100. There is no upper limit to how much you can invest in this scheme. Adults can hold an NSC jointly, and parents and guardians of children and minors can invest in this instrument on their behalf. You can create an NSC by visiting any post office.
One of the primary reasons behind the success of this scheme is its significant interest return, which does not change once you open an NSC. For instance, if you started an NSC 4 years ago at an ROI of 7.9%, you would continue to receive this interest return until maturity. The NSC interest rate principle works like a fixed deposit, wherein you don't only lock in the funds but also the rate of interest.
The current NSC interest rate is 6.8%. This ROI is up for revision every quarter. However, the government may or may not revise the NSC interest rate at the end of each quarter.
Additional Read: Why NPS is one of the Best Tax Saving Investments Options?
| Year | April - June | July - Sep | Oct - Dec | Jan - Mar |
| 2024 - 2025 | 7.7% | 7.7% | 7.7% | |
| 2023 - 2024 | 7.7% | 7.7% | 7.7% | 7.7% |
| 2022 - 2023 | 6.8% | 6.8% | 6.8% | 7.0% |
| 2021 - 2022 | 6.8% | 6.8% | 6.8% | 6.8% |
| 2020 - 2021 | 6.8% | 6.8% | 6.8% | 6.8% |
| 2019 - 2020 | 8.0% | 7.9% | 7.9% | 7.9% |
| 2018 - 2019 | 7.6% | 7.6% | 8.0% | 8.0% |
| 2017- 2018 | 7.9% | 7.8% | 7.8% | 7.6% |
| 2016 - 2017 | 8.1% | 8.1% | 8.0% | 8.0% |
Typically, you cannot withdraw the invested amount from an NSC prematurely. However, there are a few special scenarios when you can withdraw the invested sum and still earn some National Savings Certificate interest rate. These include:
- Nominees, or, in their absence, the rightful heirs can collect the NSC interest and principal prematurely if the original investor(s) passes away.
- If an investor approaches the court stating a financial emergency that they wish to resolve using their NSC, and the court passes an order allowing the premature withdrawal.
The NSC interest rate on premature withdrawal is as follows:
- If the investor withdraws funds before one year, they receive the entire principal amount but no interest return.
- If the investor withdraws funds after one year, they receive the entire principal amount and earn the latest National Savings Certificate interest rate.
Additional Read: How To Save Tax for Salary Above 10 Lakhs
The quickest and most reliable way to calculate the compound interest for different NSC amounts is by using an online NSC interest calculator.
This tool allows you to toggle the investment amount as many times as you want in correlation with the pre-fixed NSC interest rate and tenure. You can find an NSC interest calculator online.
Here are the top benefits of using an NSC interest rate calculator:
- An NSC interest calculator is user-friendly and saves you a tonne of time and effort in manually calculating the interest return.
- You don’t have to worry about making an erroneous calculation when using an NSC interest calculator.
- It costs nothing to use an NSC interest rate calculator. You’ll find this accurate tool readily available online for free.
NSC deposits work on a lump sum basis. This means you approach the post office, hand over a one-time amount, and get your NSC processed.
However, since there is no limit to how many NSCs you can invest in, several investors deposit a small amount every month and collect an NSC certificate in return. This helps them operate an NSC like a recurring deposit, except with a higher National Savings Certificate interest rate.
The NSC interest is taxable unless you file an exemption against it.
You can claim a tax rebate of up to Rs. 1.5 lakhs on your NSC’s interest rate and principal amount. This rebate can be claimed under Section 80C of the Income Tax Act (ITA) when filing your returns.
However, your entire NSC interest is taxable if you’ve already claimed a tax rebate of up to Rs. 1.5 lakhs on other tax savings instruments listed under Section 80C of the ITA.
Listed below are the documents required to start an NSC:
- The NSC application form
- Identity proof (voter ID card, driving license, PAN card, or Aadhaar card)
- Address proof (utility bills, passport, or bank statement)
- Photograph of the investor or investors in case of joint application.
You require the following paperwork to prematurely collect the principal and NSC interest.
- Original NSC document
- NSC encashment form
- Identity proof (Aadhaar card, PAN card, or Voter ID card)
- Guardian attestation in case of a minor
- If the original NSC holder passes away, the nominee or legal heir must submit Annexures 1 and 2 forms along with all the other documents listed above.
You require the following paperwork to collect the principal and NSC interest after maturity:
- NSC encashment form
- 1 identity proof (Aadhaar Card, PAN card, Voter ID card, etc.)
- Original National Savings Certificate
The current interest rate of the National Savings Scheme for the last quarter of 2024 is 7.7%.
While both NSC and PPF offer attractive interest rates, their rates may change due to several economic factors. Currently, the NSC interest rate is 7.7% which is higher than the PPF interest rate of 7.1%.
No, if you withdraw your NSC investment before completing one year, you will only receive the initial investment amount without the interest.
The interest rate for NSC is compounded annually. The interest earned in a year is reinvested in the principal for calculating the interest for the upcoming years.
Premature withdrawal of an NSC is generally not allowed before the 5-year lock-in period. However, you can withdraw the amount if you fulfill certain criteria. In this situation, the interest rate will be calculated based on the completed tenure.
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11 December 2024
6 mins read
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