About The National Savings Certificate


The National Savings Certificate is a ray of hope in a sea of despair. Since 2018, banks are aggressively reducing term deposit interest rates nearly every month. Compare this with the National Savings Certificate, and you find an interest rate that has been stable since 2019. It is popular because of two reasons – tax-savings and industry-beating assured returns. This blog aims to simplify NSC for you by giving a complete overview of everything you need to know about NSC.

What is a National Savings Certificate?

National Savings Certificate, part of the National Savings Scheme, or NSS, is a fixed income small saving instrument like PPF or fixed deposit. It is available in 5 years’ lock-in period. The popularity of NSC is due to its sovereign guarantee. You may buy a certificate for as low as Rs. 1000.

Is NSC a Good Investment?

NSC is indeed a good investment. There are three reasons for it. First, NSC comes with a sovereign guarantee, which means your money is one hundred percent safe. Second, it offers high returns on investment. Third, it is possible to apply for NSC online, which makes it convenient to access.

How Do I Get a National Savings Certificate?

There are two ways of getting the NSC.

  1. Post Office

Visit the nearby head or general post office and ask for an NSC application form. Remember to carry original identity and address proof for verification during the account opening. You may deposit money by cheque, cash, or demand draft in favor of the Postmaster. Once the account is ready, you will receive a passbook.

  1. Online

It is possible to buy NSC online from a bank like the State Bank of India (SBI). All you need is a savings account and access to internet banking. You will most likely receive the e-certificate within a few hours.

Is the NSC Maturity Amount Taxable?

On maturity, the interest earned from the National Savings Certificate is taxable as per the applicable tax rate of the investor. However, since the interest earned in the first four years gets reinvested, it doesn’t count as taxable income. Also, the interest earned during the first four years is eligible for deduction under Section 80C of the Income Tax Act.

How Many NSCs Can One Buy?

There is no limit to the number of certificates one can buy. However, the minimum investment should be Rs. 1000 and in multiples of Rs. 100. Besides, you can avail of tax benefits, under Section 80C, for only up to Rs. 1,50,000.

Is TDS Deducted on NSC?

Unlike bank fixed deposits, interest earned from NSC is TDS free. If you are planning to calculate the interest online by using a National Savings Certificate Calculator or NSC calculator 2019 service, make sure the amount is free of all deductions.

Can I Buy NSC Certificates Online?

Since 2016, NSC and KVP are available online. To invest in a certificate online, you need to have an internet banking facility in your savings account. Just like e-FDs and RDs, e-NSCs are easy to open and easy to access from anywhere around the world.

Is PPF Better Than NSC?

Both PPF and NSC are equally popular among investors as both enjoy sovereign guarantee. In PPF, the minimum you may invest in a year is Rs. 500. However, there is an upper cap of Rs. 1,50,000. With NSC, the minimum amount is Rs. 1,000, and there is no upper limit. So, in case you want to invest more than Rs. 1,50,000 a year, NSC is undoubtedly a better option.

Is NSC Safe?

The popularity of NSC is primarily because of two reasons – safety and high returns. Since the proposer of NSC is the Indian government, it is cent percent safe and secure. Unlike in banks, where only up to Rs. 5,00,000 of your capital is secured; in NSC, the entire amount is safe and secure.

Can NSC be Opened in Bank?

Yes, you may buy NSCs from banks as well. Unlike the post office, banks allow you to buy NSC only through electronic mode. You must have an internet banking facility in your savings account to avail of the benefits of online NSC. The 2020 NSC interest rate is the same for both banks as well as the post office. By opening NSC online, you get convenience for free.

How Can I Get Money After NSC Maturity?

As per the latest National Saving Certificate interest rate 2019, you will get a 7.9% interest every year that will enjoy compounding till maturity. If you buy NSC from the post office, you need to visit the concerned post office for transferring the maturity proceedings to your savings account, from which you may withdraw. Remember to carry the NSC passbook, ID proof, and encashment form to the post office. If you buy it online, you have to visit your banking service provider’s website, open the deposits section, and click on the withdraw option.

Is NSC Tax-Free?

Any deposit of up to Rs. 1,50,000 is eligible for tax deductions under Section 80C. Besides, you may also claim a tax deduction on the interest you earn during the first four years. To receive tax benefits in subsequent years, mention the interest earned under ‘Income from Other Sources’ in your tax return.


Look at any fixed deposit instrument, and you would find the interest rate declining at frequent intervals. In such volatile times, the NSC interest rate is a solace, as it remains unchanged since 2019. However, the government is mulling plans to revise the interest rate for the financial year 2020-21. Try to grab NSCs before it catches the downward trend.

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