NSC: National Savings Certificate
NSC (National Savings Certificate) is a fixed-income, 5-year savings scheme issued by the Government of India through post offices, offering sovereign guarantee on the invested amount and interest under Section 80C tax benefit.
Tenure and rate: 5-year fixed tenure (NSC VIII Issue, the active version since 2012; older 10-year NSC IX Issue was discontinued in 2015). Interest rate set quarterly by Ministry of Finance; recent rates: 7.7% (most quarters of FY 2024-25), 7.7% (FY 2023-24 onwards mostly). Compounded annually but paid only at maturity along with principal.
Tax treatment: investment up to ₹1.5 lakh per FY eligible under Section 80C (old regime only). Interest accrued each year is taxable but is also eligible for 80C deduction (deemed reinvestment) for years 1-4 — making NSC effectively tax-deferred for those years. 5th year interest is fully taxable as 'income from other sources'. Maturity proceeds are not subject to additional tax beyond what was declared annually.
Eligibility and operation: Indian residents (individual, joint A or B holders), minor through guardian. NRIs cannot purchase. Minimum ₹1,000, no upper limit (but 80C limit caps deduction). Available at all post offices with savings certificate facility. Online buying via India Post Payments Bank for existing IPPB account holders. Loan facility against NSC at most banks.
Richify Tip
NSC's interest rate is locked at the time of purchase for the full 5-year tenure — unlike PPF where the rate floats quarterly. This lock-in helps when rates are falling. Compare with 5-year tax-saving FDs (similar 80C eligibility but interest fully taxed each year, no auto-reinvestment benefit).
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