NSC - National Savings Certificate - Eligibility, Latest Interest Rate & Tax Benefits in 2022 (2022)

There are plenty of options available when it comes to investments. You can choose any as per your financial goals. National Savings Certificate or NSC, a post office savings product, is a popular option. As a low-risk investment, it comes with a host of benefits. We have covered the following in this article:

What is National Savings Certificate?

NSC – Key Information
Interest Rate6.8% per annum.
Minimum Investment Rs.1,000
Lock-in Period 5 years
Risk Profile Low-risk
Tax Benefit
Up to Rs.1.5 lakh under Section 80C

The National Savings Certificate (NSC) is a fixed income investment scheme that you can open with any post office branch. The scheme is a Government of India initiative. It is a savings bond that encourages subscribers – mainly small to mid-income investors – to invest while saving on income tax.

A fixed-income instrument like Public Provident Fund and Post Office FDs, this scheme too is a low-risk fixed-income product. You can buy it from the nearest post office in your name, for a minor or with another adult as a joint account. NSC comes with a fixed maturity period of five years. There is no maximum limit on the purchase of NSCs, but only investments of up to Rs.1.5 lakh can earn you a tax break under Section 80C of the Income Tax Act. The certificates earn a fixed interest, which is currently at a rate of 6.8% per annum. The interest rate is revised on a regular basis by the government.

Who Should Invest in NSC?

Anyone looking for a safe investment avenue to earn a steady interest while saving on taxes can choose to invest in NSC. NSC offers guaranteed interest and complete capital protection. However, like most fixed income schemes, they cannot deliver inflation-beating returns like tax-saving mutual funds and the National Pension System. The government has made NSC easily accessible for prospective investors by making it available in post office branches spread across the country.

The government has promoted the National Savings Certificate as a savings scheme for individuals. Hence, Hindu Undivided Families (HUFs) and trusts cannot invest in it. Furthermore, even non-resident Indians (NRI) cannot purchase NSC certificates. The scheme is open only for individual Indian resident citizens.

NSC - National Savings Certificate - Eligibility, Latest Interest Rate & Tax Benefits in 2022 (1)

Features & Benefits of NSC

  1. Fixed income: Currently, the scheme is generating a guaranteed return at the rate of 6.8% for investors. The returns offered by NSC have generally been higher than FDs.
  2. Types: The scheme originally had two types of certificates – NSC VIII Issue and NSC IX Issue. The government discontinued the NSC IX Issue in December 2015. So, only the NSC VIII Issue is open for subscription currently.
  3. Tax saver: As a government-backed tax-saving scheme, you can claim up to Rs 1.5 lakh under the provisions of Section 80C of the Income Tax Act, 1961.
  4. Start small: You can invest as low as Rs 1,000 (or multiples of Rs 100) as an initial investment, and increase the amount when feasible.
  5. Interest rate: Currently, the rate of interest is 6.8% p.a., which the government revises every quarter. It gets compounded annually but will be payable at maturity.
  6. Maturity period: The maturity period is five years.
  7. Access: You can purchase this scheme from any post office by submitting the necessary documents and undergoing the KYC verification process. Also, it is easy to transfer the certificate from one post office branch to another.
  8. Loan collateral: Banks and NBFCs accept NSC as collateral or security for secured loans. To do this, the concerned postmaster should put a transfer stamp on the certificate and transfer it to the bank.
  9. Power of compounding: The interest you earn on your investment gets compounded and reinvested by default, though the returns do not beat inflation.
  10. Nomination: The investor can nominate a family member (even a minor) so that they can inherit it in the unfortunate event of the investor’s demise.
  11. Corpus after maturity: Upon maturity, you will receive the entire maturity value. Since there is no TDS on NSC payouts, the subscriber should pay the applicable tax on it.
  12. Premature withdrawal: Generally, one cannot exit the scheme early. However, they accept it in exceptional cases like the death of an investor or if there is a court order for it.

Tax benefits of NSC investment

Investments of up to Rs 1.5 lakh in the National Savings Certificate can earn the subscriber a tax rebate under Section 80C. Furthermore, the interest earned on the certificates is also added back to the initial investment and qualify for a tax break as well.

For instance, if you purchase certificates worth Rs 1,000, you are eligible for a tax rebate on that initial investment amount in the first year. But in the second year, you can claim a tax deduction on the NSC investment(s) that year as well as the interest earned in the first year. This is because the interest is added to the original investment and compounded annually.

How to invest in NSC through electronic mode?

If you have a bank or post office savings account, you can invest in the NSC electronically (e-mode). Moreover, you will require an internet banking facility for your savings bank account to invest in the NSC. If you have not maintained your savings account, reactivate it and apply for the internet banking facility. You can easily hold the NSC in an electronic mode similar to e-FD or e-recurring deposits.

(Video) Post Office NSC Scheme 2022 details & tax benefits | How to get 5 year tax rebate on NSC Investment?

How can you invest in NSC through passbook mode?

You can invest in NSC through the passbook mode if you are not comfortable with the electronic method. It is recorded in a passbook or e-mode format printed. Moreover, all your transactions are printed in your passbook, similarly to a bank passbook. However, you may opt to record your transactions manually in the passbook.

Your passbook will have the physical signature of the authorised officials. If you opt to replace the passbook mode with the electronic mode, the authorised official will cancel all the pages in your passbook, which will be collected and destroyed.

In the case of passbook mode, the bank branch or the post office takes receipt of your passbook. Suppose you lose your physical NSC; you get a passbook instead of a pre-printed NSC. The old national savings certificate number would be noted on the issued passbook. You can transfer the national savings certificate from one bank branch or post office to another as per rules and guidelines. The passbook mode is available for pledging across India from 01 July 2016. However, NSC, once pledged, cannot be transferred.

Comparing NSC with other tax-saving Investments

NSC is one of the tax-saving investment options available under Section 80C of the Income Tax Act, 1961. The other popular options are Equity Linked Savings Schemes (ELSS), National Pension System (NPS), Public Provident Fund (PPF) and Tax-sSaving Fixed Deposits (FD). The table below compares NSC with other tax-saving investments:

InvestmentInterestLock-in PeriodRisk Profile
NSC6.8% p.a.5 yearsLow-risk
ELSS fundsMarket-linked, historical returns show 12% to 15% p.a.3 yearsMarket-related risks
PPF7.1% p.a.15 yearsLow-risk
NPSMarket-linked, historical returns show 8% to 10% p.a.Till retirementMarket-related risks
FD4% to 6% p.a.5 yearsLow-risk

Now that you have some knowledge of NSC, is this scheme for you? If you are looking for capital protection and tax deductions under Section 80C, you can consider investing in NSC.

Frequently Asked Questions

What is NSC?

NSC, i.e. National Savings Certificate, is a fixed-income investment scheme backed by the government of India. The savings bond is suitable for small and medium-income investors to save tax while earning returns. This is a secure and low-risk product.

How to buy NSC online?

As of today, you cannot subscribe to NSC online. You will be required to visit the nearest Post Office to fill out the NSC application form and submit it to the executive in order to open an NSC account.

How to buy NSC?

Step 1: Visit the nearest Post Office branch and submit the duly filled NSC application form.
Step 2: Attach self-attested copies of the documents and proofs as required by the Post Office. Carry the original documents as well for verification.
Step 3: Make the payment of your investment in the form of cash, cheque, or demand draft.
Step 4: Upon processing your application, an acknowledgement of the same will be provided marking the initiation of your NSC account.

How to show NSC interest in income tax?

You can show the NSC interest earned in one of the following ways while filing ITR:

  • You can show the interest earned from NSC under ‘Income from Other Sources’.
    1. You can claim a deduction for interest earned from NSC, but you don’t show it as income. In this case, you can consider the entire interest income you have earned over the years as income in the last year.
    2. Don’t claim the interest earned as a deduction or income. In this case, all the interest earned will be counted as ‘Income from Other Sources’ in the last year. Only the first four years’ interest will be counted as a deduction.

It is important that you stick to one of the methods mentioned above throughout the NSC tenure. Experts prefer that you choose Method 1 as the interest and income will be distributed throughout the tenure and do not accumulate to the last year.

(Video) NSC Post Office Scheme In Hindi | National Savings Certificate 2022 | NSC Tax Benefits | Josh Money

NSC comes under which section?

The money you invest into NSC gets income tax deductions under Section 80C of the Income Tax Act, 1961.

NSC or KVP? Which is better?

There are a lot of differences in the working and objectives of the two schemes—the National Savings Certificate (NSC) and Kisan Vikas Patra (KVP). To make this difference evident, here is a comparison table.

ParametersNSCKVP
EligibilityResident Indians onlyOnly Resident Indians and Trusts
Minimum Deposit AmountRs.100Rs.1,000
Maximum Deposit AmountNo limitNo limit
Interest Rate (Q1 of FY 2022-23)6.8% p.a.6.9% p.a.
Investment Tenure5 years124 months
Premature WithdrawalNot allowedOnly after 30 months from the date of investment
Tax BenefitsAvailableNot Available
Loan FacilityAvailableAvailable
How to SubscribeAt Post Office branchesAt Post Office and participating bank branches
How to open NSC in the Post Office?
  • Visit the nearest Post Office branch.
  • Fill up the application form and submit it with the necessary documents.
  • Make the payment towards the NSC account in cash, cheque, or DD.
  • Once the processing is done, an acknowledgement for the same will be given.

If you have a bank or post office savings account, you can invest in the NSC electronically (e-mode). Moreover, you will require an internet banking facility for your savings bank account to invest in the NSC.

How to calculate NSC interest?

You must know that the interest on NSC is compounded on a yearly basis. That is the interest you calculate on the principal amount invested in NSC should be added to the principal amount to get the principal amount for the second year.
You can calculate interest using our simple and compound interest calculator.

How to encash/redeem NSC certificates after maturity?

Upon maturity, the NSC can be encashed at any Post Office branch and not necessarily at the branch where the account is held. If you want to withdraw the money from a branch that is not your account’s home branch, you will have to submit an application with details, such as serial number, issue date, full name, registered and current address.

When you want to encash the maturity amount, you have to carry the following documents with you:

  • Original NSC certificate
  • Identity proof
  • NSC encashment form
  • The person entitled to receive the encashment must sign behind the certificate after receiving the payment
Which is better? NSC or PPF?

Both these government-backed schemes are famous for years now. Though both these options come with minimal risk, they both have their own benefits and drawbacks. You can choose between the two based on your investment objectives.

ParameterNSCPPF
Account TypeSingle or JointSingle only
Tenure5 years15 years
Interest Rate6.8% p.a.7.1% p.a.
Number of AccountsMultiple accounts can be opened with a maximum deposit of Rs.10,000 per certificateOnly one PPF account per person.
Exception: You can open an account for your child and be a joint account holder for it.
ContributorSelf, joint account holder, or guardian in the case of a minorSelf or parent of the minor
Tax BenefitsPrincipal is tax-free up to Rs.1.5 lakh per financial year u/s 80C; the interest is taxablePrincipal is tax-free up to Rs.1.5 lakh per financial year u/s 80C; the interest and maturity amount is tax-free as well
WithdrawalVisit the Post Office branch to withdraw or encash the NSC account balance. In case you are sending a representative, provide a signed letter to authorise the representative to withdraw the money.Visit the bank or Post Office branch to withdraw. Or, visit the NSI India website to download Form C or its equivalent to apply for withdrawal.
How long does it take for NSC to provide maturity amount double the principal amount?

NSC will take about 10.5 years to double your investment at the current interest rate of 6.8% p.a.

How to get an NSC certificate?

When you submit the application form to open the NSC account along with the KYC documents, you will have to make the payment towards the same. Once this is processed, the Post Office branch will provide you with the NSC certificate.

(Video) Best Post Office Scheme 2022 - NSC Scheme, Interest Rate, Tax Benefits । National Saving Certificate

How to check the NSC certificate online?

You have to opt for the online passbook service for the NSC account by informing the Post Office branch regarding the same. The executives will give you the internet banking credentials to be used. Then, you can log into the account to view all the transaction details on your NSC account. This facility is available only at the select branches of the Post Office.

Does ULIP or NSC provide tax benefits u/s 80c?

Both ULIP and NSC provide income tax deductions on the principal invested in them under Section 80C.

How to transfer NSC to another Post Office?

In order to transfer the NSC account from one Post Office branch to another, you have to submit an application at the old branch or the new branch. Further, the application must have the signatures of all the account holders in the case of Joint A or B account type.

How to fill an NSC application form?

Step 1: Fill up the application form with the relevant information, such as the Post Office branch name, your savings account number held with Post Office, and the applicant’s name.
Step 2: Paste the applicants’ photograph, and select the account you would like to open, i.e. ‘NSC VIIIth issue’ from the options.
Step 3: Select the account holder type and account type from the available options.
Step 4: In the case of ‘Minor through Guardian’, fill up the details of the minor in table 1.
Step 5: Specify the amount you would like to deposit to open the account in figures and words. IF providing a cheque or DD, please write the serial number and date on it.
Step 6: Now, provide all the personal and contact details of the applicants in table 2.
Step 7: All the applicants must add their signatures at the end of the page along with their names.
Step 8: Next, skip to the ‘Nomination’ section and enter the applicants’ names and the nominee’s name. In the table provided, provide details, such as the applicant’s relationship with the nominee, the nominee’s full address, Aadhaar number, and others.
Step 9: In the case of illiterate applicants, add the signatures of two witnesses for the same along with the applicants’ signatures. That’s it!

How to find the NSC certificate number?

The NSC certificate number will be provided right on the certificate. It is recommended that you note this certificate number somewhere so that you can apply for a duplicate certificate by quoting this number in case your original certificate is lost/stolen.

How to withdraw NSC before maturity?

NSC comes with a lock-in period of 5 years, i.e. it cannot be withdrawn before maturity. As an exemption, NSC can be prematurely withdrawn only in the following circumstances:

  • On the death of a single account, or any or all the account holders in a joint account
  • On forfeiture by a pledgee being a Gazetted officer
  • On order by court
Which is better? NSC and KVP?

While both NSC and KVP are offered as small savings schemes, the way the two schemes work is different. NSC provides income tax benefits, but KVP does not. The below table provides a comparison of the two schemes.

ParameterNSCKVP
Special FeatureStable and guaranteed savings scheme that provides high returnsInvested amount doubles on maturity
Minimum Amount to Open the AccountRs.1,000Rs.1,000
Maximum LimitNoneNone
Interest Rate6.8% p.a. (Q1 of FY 2022-23); compounded annually6.9% p.a. (Q1 of FY 2022-23); compounded annually
Tenure5 years124 months
Premature ClosureNot allowedAllowed after 2 years and 6 months from the date of opening the account
Tax BenefitsThe tax deduction can be claimed u/s 80C of the Income Tax ActNot available
Which is better? NSC or 5-year Tax-Saving FD?

Though both NSC and 5-year FDs have a tenure of five years and offer income tax deduction u/s 80C, there are quite a few things that are different. If you are confused on which product to choose to save taxes, refer to the below table before deciding:

ParameterNSCFD
TDS deductionNo deduction upon maturityTDS deducted upon maturity
Collateral facilityCan be usedCannot be used
Interest Compounding FrequencyOnce a yearOnce every quarter
Interest Rate6.8% p.a. (Q1 of FY 2022-23)5% – 7.25% p.a. (varies from bank to bank)
What is the minimum amount for NSC?

The minimum amount required to open an NSC account is Rs 1,000. If you want to deposit a higher amount, you can do so in multiples of Rs 100. There is no maximum limit for the amount you deposit.

How to know my NSC ID?

Request your bank or Post Office to provide the login credentials such that you can access your NSC account details online.

(Video) National saving certificate NSC account New interest rate , maturity, eligibility, one time deposit

How to link NSC with Aadhaar?

You can link Aadhaar to any Post Office Saving Schemes either online or offline. Here is how you can do it online:

  1. Log on to your internet banking account using your User ID and password to access your NSC account.
  2. Click on the ‘Registration of Aadhaar Number in Internet Banking’ option on the home page.
  3. Enter your 12-digit Aadhaar number and click on ‘Confirm’.
  4. Select the account you would like to link Aadhaar and done.
What is the NSC VIII issue?

Earlier, NSC came in two variants—NSC VIII and NSC XI. The former came with a tenure of 5 years and the latter with that of 10 years. However, the latter variant is discontinued. Therefore, it is only an NSC VIII issue with a 5-year tenure that is available for subscription currently.

How to pledge NSC?

Step 1: Fill in your details on Form NC41, get the signatures of the pledger and pledgee, and submit it to the Post Office branch.
Step 2: Attach the original certificate with the application form while submitting it to the Post Office branch.
Step 3: You can pledge the NSC certificate only to:

  • The President of India/Governor of the State.
  • RBI/Scheduled Bank/Co-operative Society/Co-operative Bank.
  • Corporation (public/private)/Govt. Company/Local Authority.
  • Housing finance company.

Step 4: The PostMaster will endorse ‘Transferred Security to’ written on the certificate in red with date and signature upon processing your application. Fees may be charged for the same.

NSC is for how many years?

NSC VIII issue that is currently available for subscription comes with a tenure of five years.

How to verify an NSC certificate?

Step 1: Apply for internet banking at your Post Office or bank. Once it is approved, you can access your NSC account online.
Step 2: There will not be any serial numbers anymore. Instead, an account number will be issued.
Since everything has been upgraded to online banking since 2016, there are fewer possibilities of you getting scammed over NSC investment.

NSC vs LIC? Which is better?
ParameterNSCLIC
ObjectiveSmall savings with returnsLife cover with sum assured
Payment FrequencyOne-time lump sum paymentPremiums can be paid in monthly, quarterly, or yearly intervals
Tax BenefitsCapital invested gets income tax deduction u/s 80CCapital, interest earned, and maturity amount are exempt from tax
Sub-categoriesNone as of nowMany different life insurance schemes are available
NSC - National Savings Certificate - Eligibility, Latest Interest Rate & Tax Benefits in 2022 (2)

Invest in Direct Mutual Funds

Save taxes upto Rs 46,800, 0% commission

(Video) Post Office NSC Scheme In Hindi. National Saving Certificate 2022. Post Office NSC. Interest Rates.

FAQs

Is NSC exempt from tax? ›

Save tax on Interest: Interest earned on NSC is taxable under the head “Income from Other Sources”. However the interest is reinvested for the initial 4 years and therefore will not be chargeable to Income Tax and this reinvestment will be allowed as deduction u/s 80C of the Income Tax Act, 1961.

What is the current interest rate on NSC? ›

The PPF interest rate is 7.1%, whereas, NSC is 6.8%.

What is NSC and its benefits? ›

In a Government of India initiative, the National Savings Certificate is a fixed income investment scheme that you can open easily with any post office. It is a savings bond scheme that encourages subscribers primarily small to mid-income investors to invest while saving on income tax under Section 80C.

Can I invest more than 1.5 lakhs in NSC? ›

There is no upper limit for investments in the National Saving Certificates but investments of up to Rs 1.5 lakhs in NSC's is liable for tax reduction under section 80C of the Income Tax Act.

Is interest on NSC eligible for 80C? ›

Tax benefits of NSC investment

Investments of up to Rs 1.5 lakh in the National Savings Certificate can earn the subscriber a tax rebate under Section 80C. Furthermore, the interest earned on the certificates is also added back to the initial investment and qualify for a tax break as well.

Can we take tax benefit on NSC every year? ›

Similarly, you can claim a deduction u/s 80C every year on the interest earned from NSC till the year of maturity. At maturity, the interest amount paid out will be subject to tax as per your income tax slab rate.

Will NSC interest rates increase in 2022? ›

Govt. notifies that there is no change in interest rates for Small Saving Schemes (NSC, PPF, KVP, SSAS, SCSS, etc.) in respect of Q1 of FY 2022-23 (01/04/2022 to 30/06/2022), as compared to the interest rates applicable in respect of Q4 of FY 2021-22 (01/01/2022 to 31/03/2022).

What is the interest rate of NSC in Post Office 2022? ›

The NSC interest rate for the quarter ending December 31, 2022 is 6.8%, compounded annually.

Is NSC maturity amount tax free? ›

Maturity: Interest and maturity amount is not taxable. Investment: Tax-free under section 80c. Maturity: TDS on interest and interest is taxable as per income tax slab rates. Under Section 80C, the investment is tax-free.

Which is better NSC or bank FD? ›

Both NSC and FD offer assured returns for your investment. A fixed deposit will have more flexibility in terms of the tenure of the deposit. The initial amount deposited in an NSC will not be taxed. Senior citizens can avail of additional benefits for both NSC and FD accounts.

What happens to NSC after maturity? ›

If the NSC maturity is not withdrawn by the account holder then the scheme turns into post office savings scheme interest for 2 years. The post office will process the form and issue a cheque or they can get issued a cheque from the head office and hand over the cheque to you within a few days.

Is NSC better than PPF? ›

As far as the interest is concerned, PPF interest is tax-free, whereas, NSC interest is taxable and will be added to your taxable income. However, the interest in NSC is also eligible for deduction under Section 80C of the Income Tax Act. It is better to pay tax on the accrued interest annually rather than on maturity.

How much tax we can save on NSC? ›

Here are the tax benefits it offers: Investors can claim a deduction for the investments made in the National Savings Certificate up to ₹1.5 lakhs per annum under Section 80C of the ITA. The interest on NSC for the first 4 years can also be claimed as an NSC investment deduction.

Is TDS applicable on NSC? ›

No TDS is deducted for interest earned on NSC. However, it is deducted for interest earned on tax saving FDs. It is deducted at 10% if the interest income exceeds INR 40,000 (INR 50,000 for senior citizens).

Which interest income is tax exempt? ›

Under 80TTA of the Income Tax Act, interest up to Rs 10,000 earned from all savings bank accounts is not taxable. This is valid for co-operative banks, post offices or savings bank accounts. If the interest earned from all these sources is more than Rs 10,000, then the extra amount comes under tax deduction.

How is NSC interest calculated on income tax? ›

Example to Calculate Tax Amount on the NSC Maturity Value

6.8% p.a. Here, we have to apply the compound interest formula of P [1+ R/100]^n. Here, interest earned is taxable as per the investor's tax slab rate.

What is the maturity value of NSC after 5 years? ›

Suppose you invest Rs 10 lakhs in a 5-years National Savings Certificate that offers an interest rate of 6.8%. By the end of the 5 years, i.e. by the time of maturity, you would have earned a total interest of Rs 3,89,493 and a maturity value of Rs 13,89,493.

How can I save tax beyond 1.5 lakhs? ›

Recommended ways of saving taxes under Sec 80C,80D and 80EE
  1. Make an investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income. ...
  2. Buy Medical Insurance, maximum deduction allowed is Rs. ...
  3. Claim deduction up to Rs 50,000 on Home Loan Interest under Section 80EE.
29 Jun 2022

When in 2022 will interest rates go up? ›

Mortgage Rate Forecast for November 2022

The Federal Reserve began hiking its benchmark interest rate in March for a total of five times through September. It has now signaled that it plans to raise interest rates again before the end of the year during its meeting in early November.

Will rates go up April 2022? ›

The 30-year fixed rate fell from 7.08% on Nov. 10 to 6.61% on Nov. 17. Similarly, the average 15-year fixed mortgage rate dropped from 6.38% to 5.98%.
...
Current mortgage interest rate trends.
MonthAverage 30-Year Fixed Rate
January 20223.45%
February 20223.76%
March 20224.17%
April 20224.98%
5 more rows

What will happen to 2022 interest rates? ›

As of November 2022, the market consensus on the mortgage rate forecast in Canada is for the Central Bank to increase mortgage interest rates by another 0.50% in 2022/early 2023 from 3.75% to a high of 4.25%.

What is the maturity value of NSC in post office? ›

A joint account will be transferred in the name of the remaining account holder or account holders, as applicable, in the event that one of the account holders passes away. What is the maturity interest payment on NSC? The maturity value of an account created with Rs 1000 is Rs 1462.54 .

What is interest rate for NSC for senior citizens? ›

Ans: Presently, the interest rate on an SCSS is 7.4 percent as of quarter 4 of the financial year 20-21. The interest will be payable on March 31, June 30, September 30 and December 31.

Can NSC be continued after 5 years? ›

NSC has a set maturity of 5 years. Although there is no upper limit on the purchase of NSCs, only investments up to Rs. 1.5 lakh qualify for a tax deduction under Section 80C of the Income Tax Act. Certificates yield a set rate of interest, which is presently 6.8 percent per year.

Can I invest 10 lakhs NSC? ›

As there is no maximum investment limit in NSC, one can purchase NSCs for any amount. So, if you invest Rs 10 lakh in NSCs today, your investment will grow to Rs 13.89 lakh after five years. Amount invested in NSC up to Rs 1.5 lakh in every financial year qualifies for income tax deduction under Section 80C.

Is NSC or RBI bond better? ›

Advantages of investing in FRSB:

There is almost no credit risk involved as these are government bonds issued by the RBI. Interest rates are higher than normal fixed deposits and NSC. It can be a source of regular income as it pays interests on a half-yearly basis.

How many times can I invest in NSC? ›

There is no maximum limit to the number of NSCs that one can buy. The minimum amount required for an NSC investment, however, is Rs. 1000.

Can I deposit money monthly in NSC? ›

Post Office Recurring Deposit Account

Under this national savings scheme, investors are required to deposit a predetermined amount of money each month for a term of 5 years, which can further be extended to 10 years.

Can I withdraw NSC before 5 years? ›

Is premature closure allowed? NSC cannot be closed early before 5 years unless there is death of a single account, or any or all the account holders in a joint account; forfeiture by a pledgee being a gazetted officer or on order by court.

Do we need to submit 15G for NSC? ›

TDS on FDs is deducted at 10%, if the interest accrued exceeds Rs 10,000 in value in a financial year. However, a person can avoid the tax deduction at source by submitting the 15G form (15H in case of senior citizens). NSC interest, on the other hand, is taxed in the final year, i.e. upon attaining maturity.

How do I avoid tax on savings account interest? ›

You can avail deduction of up to Rs 10,000 on the total savings account interest income earned. This deduction can be availed under Section 80TTA of the Income Tax Act and is available to an Individual and HUF. If your total interest income is below Rs 10,000 then you do not have to pay tax on it.

How do I know if my interest is tax-exempt? ›

Tax-Exempt Interest. Interest on a bond that is used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a U.S. possession, or any of their political subdivisions.

How much interest is tax free in India? ›

A standard fixed deposit from Shriram will allow you claim exemption on the interest amount up to Rs. 5,000 p.a. It is noteworthy that resident citizens & senior citizens whose income is below Rs. 2,50,000 and Rs. 5,00,000 respectively can submit Form 15G/Form 15H shall be completely exempted from paying tax.

How is tax calculated for NSC? ›

Example to Calculate Tax Amount on the NSC Maturity Value

6.8% p.a. Here, we have to apply the compound interest formula of P [1+ R/100]^n. Here, interest earned is taxable as per the investor's tax slab rate. One must remember that NSC does not reinvest the 5th year's interest.

Is NSC subject to TDS? ›

According to the NSC (Viii Issue) Rules, 1989, interest earned on the NSC certificates is not subject to TDS. On the other hand, interest earned on a bank tax-saving FD is subject to TDS. The TDS is deducted at the rate of 10 per cent in case interest accrued or paid out exceeds Rs 10,000 in a financial year.

Is NSC and KVP taxable? ›

National Savings Certificate falls under the small savings tier and is issued by the Government of India. Kisan Vikas Patra is offered by the Indian Postal Service and is authorised by the Reserve Bank of India. NSC offers tax benefits unlike KVP.

Is NSC interest rate fixed for 5 years? ›

They have a five-year lock-in term. Fixed interest is earned on NSC certificates. The current interest rate is 6.8%.

Is Fd better than NSC? ›

Both NSC and FD offer assured returns for your investment. A fixed deposit will have more flexibility in terms of the tenure of the deposit. The initial amount deposited in an NSC will not be taxed. Senior citizens can avail of additional benefits for both NSC and FD accounts.

What are the 4 compulsory subjects for a NSC? ›

The 4 compulsory subjects are:
  • First Language.
  • Second Language.
  • Mathematics or Maths Literacy.
  • Life Orientation.

Which is better option NSC or KVP? ›

If one wants to take all things in parallel then KVS is better but if one wants to do something more in the educational field then they should have to go for NVS. As we all know that the selection procedure of students in NVS is different than in KVS.

Which is better investment KVP or NSC? ›

The investment tenure in case of NSC is five years. However, in case of KVP, the investment tenure is 118 months which is approximately around nine years and eight months. Therefore, the investment tenure of KVP is long than NSC.

Videos

1. National Savings Certificate - Eligibility, Interest Rate & Tax Saving Benefit. Post office NSC |
(Insurance Jagat)
2. NSC Post Office Scheme Details| National Savings Certificate 2022 | NSC Tax Benefits | NSC VS KVP
(Bangla Gyan Therapy / বাংলা জ্ঞান থেরাপি )
3. NSC Calculator| NSC Interest Calculation with NSC Interest Rate| National Saving Certificate
(FinCalC TV)
4. National Savings certificate - NSC Account details, eligibility, interest rate, maturity, Age limit
(RG Tv Kannada)
5. NSC Account interest rate // National Savings Certificate scheme, eligibility criteria, maturity,
(RG Tv Kannada)
6. Post office NSC 2022 | National saving certificate | NSC post office
(Satvinder Narwal)

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