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Indian Post Office NSC Scheme: National Saving Certificate

What is the Indian Post Office NSC scheme? NSC or National Saving Certificate is a Government-backed fixed income scheme which can be opened at any Post Office in India. The NSC of the Indian government is a savings bond that encourages policyholders – especially small and medium-sized investors – to invest while saving income taxes.

Fixed income schemes such as PPF or Public Provident and the FDs or Fixed Deposits, Indian Post Office NSC scheme is also a safe and low-risk product. You can buy NSC at the nearest post office in your name, with other adults on a joint account or you can buy it for minors. The scheme’s fixed maturity is five years.

There is no upper limit for the acquisition of the NSC scheme, but only an investment of 1.5 lakh is eligible for a tax reduction according to section 80C of the Income Tax Act. NSC gives you a fixed interest rate, which is currently 6.8% yearly.

Who can invest in NSC?

Anyone looking for a secure investment opportunity to save taxes and earn a steady income can use this scheme. There is a guaranteed interest in NSC and full capital protection.

But, like most fixed income programs, NSC may not yield inflation-friendly returns such as tax-saving mutual funds and National Pension Schemes. The government makes NSC easy for potential investors by making it accessible at post offices.

By making it accessible at post offices Government makes NSC easy for potential investors. In essence, the government is promoting the National Savings Certificate as a unique savings plan for individuals.

As a result, trusts and (HUFs) Hindu Undivided Families cannot invest in NSC. Even (NRIs) non-resident Indians cannot buy National Saving Certificate. NSC is only open to Indian individual citizens.

How and where can you buy it?

Earlier banks of post offices were issued physically pre-printed NSC certificate. But, the same was stopped in July 2016. At present, the NSC certificate can be: 

  • Issued in two modes, i.e. e-mode (electronic mode) or passbook mode.
  • Buy from all banks of the public sector and three major private banks which are Axis, ICICI, and HDFC bank. 

If you have a savings account in a bank/post office, you can purchase an NSC certificate in electronic mode if you have access to online banking. The certificate can be purchased by the investor separately or on behalf of minors or with other adults as a joint account.

National Saving Certificate holding modes

Following are the different ways to hold a National Savings Certificate:

  • Single holder certificate: In a single holder certificate the investor can buy NSC for himself or on behalf of a minor.
  • Joint type A certificate: In this case, the certificate is held by two investors with the same share of income.
  • Joint type B Certificate: This type is also a joint ownership certificate, but the profits paid out are paid to only one holder.

Indian Post Office NSC Scheme Eligibility

Here are the main eligibility criteria for investing in a National Savings Certificate:

  • All residents of India have the right to invest in the NSC.
  • NRIs or Non-resident Indians cannot buy a new NSC. However, if a regular NSC customer becomes an NRI before the certificate expires, the NSC can behold until its maturity.
  • Undivided Hindu families and Trusts cannot invest in NSCs.
  • Only the HUF’s Karta can invest in NSC in its name.

Also Read: All About India Post Payment Bank: IPPB

Documents required for NSC

Here are the documents you need to submit to invest in NSC:

  • NSC application form.
  • Investors must provide identification proof in original, like

          (i) Passport.

         (ii) Permanent Account Number (PAN).

         (iii) Voter ID.

          (iv) Drivers license.

          (v) Government or senior citizen ID for verification.

  • Photos.
  • Proof of address, such as passport, electricity bills, telephone bill, bank statement, along with checkbook.

Indian Post Office NSC Scheme features and benefits

Fixed income

Currently, an investor gets a guaranteed return (6.8% annual interest) and he/she can enjoy a regular income.


Originally the NSC scheme had two types of certificates – NSC VIII and NSC IX. In December 2015 government discontinued the NSC IX type. As a result, only the NSC VIII type is currently available for subscription.

Tax savings 

An investor can invest up to 1.5 lakh in NSC and can take the advantage of section 80C of Income Tax reduction as the scheme is government backed tax saving scheme.

Start small

One can invest as little as 1,000 rupees (or multiples of 100 rupees) as an initial investment and increase the amount if possible.

Interest rates 

The interest rate of NSC is currently 6.8%, which is reviewed quarterly by the government. NSC gets compounded annually but is payable at maturity.

Period of maturity  

The maturity period is five years for NSC.


One can buy the NSC scheme at any post office by submitting the documents which are necessary for it and completing the KYC process. The certificate can easily be transferred from one post office to another Post office.

Guarantee of loans

The NBFCs and banks accept NSC as a guaranty or security for secured loans. For this purpose, the postmaster in question must put a stamp of transfer on the certificate and transfer it to the bank.

Compounding power 

The interest you get from your investment accumulates and is reinvested by default, even if the return does not exceed inflation.


The investor can appoint any family members (including minors) to inherit NSC if the investor passes away.

Corpus after maturity 

You will receive the full amount due upon the maturity of NSC. As there is no TDS for NSC payments, participants of the scheme should pay appropriate taxes on it.

Premature withdrawal 

In general, it is not possible to quit the scheme too early. However, the Post office accepts this in exceptional cases, such as the investor’s death or if a court order is issued for it.

NSC investments tax benefits

Up to 1.5 lakh investment in national savings certificates can provide the participant with a tax deduction as per section 80C of the Income Tax Act.

In addition, the interest earned on the NSC scheme is also added to the initial investment and may also be eligible for a tax reduction. For example, if anyone buys a certificate having a value of Rs 1,000, he/she is entitled to a tax deduction from the amount of the initial investment in the first year.

However, in the second year, you can apply for a tax deduction for that year’s NSC investment in addition to the interest earned in the first year. This is because interest is added to the initial investment and added every year.

Comparison of NSC with other investments to save taxes

National Saving Certificate is one of the tax savings schemes under the Income Tax Act section 80C. Other popular schemes include Public Provident Fund (PPF), National Pension System (NPS), Equity Linked Savings Schemes (ELSS), and Tax-saving Fixed Deposits (FD).

Investment Interest Lock-in-Period      Risk Profile
      NSE       6.8 %       5 years       Low-risk
      NPS       8% -10%       Till retirement       Market-related risks
      PPF       7.1 %       15 years       Low-risk
      FD       5-7 %       5 years       Low-risk
      ELSS Funds       12-15       3 years       Market-related risks


Now that you know about the Indian Post Office NSC scheme and its benefits, you can safely say that this low-risk safe scheme is designed for risk-averse investors. For those looking for capital security or investors who want to diversify their portfolios with fixed income instruments, this is a scheme you can invest in.


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