NSC – National Savings Certificate: Interest Rates, Tax Benefits and More

NSC – National Savings Certificate, a structured savings scheme with fixed returns, is a great way for individuals to invest and save. It is available to adults, joint holders, guardians, and under certain conditions, even minors. The article discusses how to take advantage of the tax benefits, how the fixed returns provide security, and how this article discusses in detail the scheme’s eligibility, transferability, interest rates, encashment, maturity, and pre-encashment.

NSC Quick Information 

Scheme Name	NSC – National Saving Certificate
Issue	NSC VIII Issue
Maturity Period	5 Years
Interest Rate	7.7% (From April 2023 Onward)
Minimum Investment	Rs. 1000
Tax Benefit	80C available upto 1,50,000/- deduction

Who Can Invest in NSC?

Before you decide to invest in the NSC (National Savings Certificate, Series VIII), a type of savings scheme, it’s essential to understand who can apply for it. This scheme allows individuals to invest their money and earn returns over a specified period. The eligibility criteria are as follows:

1. Individuals: Any adult can purchase the NSC issue in their own name. This means that a person who has reached the age of adulthood can invest in this scheme.

2. Joint Holders: The scheme allows for joint holders, where up to two other adult individuals can be joint holders with the primary applicant. The joint holders can choose between two options:

• Jointly or survivor(s) (Type A): In this case, all joint holders have equal rights, and in case of the death of any joint holder, the surviving joint holder(s) take ownership of the investment.
• Joint Holders (Type B): Alternatively, joint holders can opt for “either or survivor” (Type B) mode. This means that any one of the joint holders can operate the account independently. In case of the death of one joint holder, the surviving joint holder(s) continue to hold the investment.

4. Guardians: Guardians can open a single holder type account on behalf of a minor or a person of unsound mind. This allows legal guardians to invest in the scheme for the benefit of minors or individuals who cannot manage their own affairs.

5. Minor Individuals: A minor who has attained the age of 10 years can also open a single-holder type account. This means that a child as young as 10 years old, under certain conditions, can invest in this scheme with themselves as the primary account holder.

Where to Apply for NSC?

You can apply for an NSC (National Savings Certificate) at various locations. NSCs are issued at:

1. Departmental Post Offices: All Post Offices that conduct savings bank transactions are authorized to issue NSCs. This includes the official Post Offices managed by the government.

2. Public Sector Banks: All public sector banks offer NSCs. These are government-owned banks that provide a range of financial services to the public.

3. Private Banks: NSCs are also issued by specific private banks that are authorized to do so. These private banks include ICICI Bank, Axis Bank, and HDFC Bank.

When you decide to invest in NSCs, you can visit any of these authorized locations to apply for and acquire the certificates. It’s a good idea to check with the specific bank or Post Office for their procedures and documentation requirements before making your investment.

How to Apply?

To apply for NSC (National Savings Certificate), follow these steps:

1. Application Form: Obtain the prescribed application form for NSC from the respective Post Office, Bank, or their authorized agents.

2. Complete the Form: Fill out the application form with accurate and relevant details as required. Make sure to provide all necessary information correctly.

3. Payment: Make the required payment for purchasing the NSC. You can make the payment in several ways:
– Cash: Pay the amount in cash if applicable.
– Cheque/Pay Order/Demand Draft: If you prefer a secure transaction, provide a cheque, pay order, or demand draft for the specified amount.
– Post Office Savings Bank Account: If you have a Post Office Savings Bank Account, you can present a withdrawal form along with your passbook.
– Surrender of Matured Certificate: If you have a matured old certificate or other savings instruments like Kisan Vikas Patra, you can surrender them to make the payment.
– Electronic Mode (CBS Platform): If purchasing from Post Offices on a CBS (Core Banking Solution) platform, you can make payment using electronic modes.

4. Submission: Submit the completed application form along with the payment to the Post Office, Bank, or their authorized agent. You can do this in person at the respective institution’s branch.

5. Documentation: Ensure you have all necessary documents, such as identification and proof of address, as may be required by the institution.

6. Confirmation and Issuance: After completing the application process and making the payment, you will receive confirmation of your application. The institution will issue the NSC certificates to you as per the terms of the scheme.

Aadhaar Number Required

When applying for NSC (National Savings Certificate), it’s important to provide your Aadhaar Number or proof of Aadhaar enrolment. Here’s how the Aadhaar requirement works:

1. New Applicants: If you’re applying for NSC for the first time, you must provide your Aadhaar Number as part of the application process. If you haven’t yet enrolled for Aadhaar, you can provide proof of your enrolment for Aadhaar.

2. Existing NSC Holders: Even if you already hold NSC certificates, you are also required to furnish your Aadhaar Number. This requirement ensures that both new and existing investors have their Aadhaar information linked to their NSC holdings.

The Aadhaar Number serves as a unique identification and verification tool. It helps the relevant authorities ensure transparency, accuracy, and security in financial transactions, including investments like NSC. When applying, make sure to include your Aadhaar Number or the necessary proof of enrolment to comply with this requirement.

Nomination for NSC

Nomination is an important aspect of NSC (National Savings Certificate) ownership. Here are the details regarding the nomination:

1. Nomination Facility: The option for nomination is available for all types of NSC certificates, including those with joint holders. However, this facility is not applicable for certificates purchased by or on behalf of a minor.
2. No Nomination Scenario: If a certificate holder has not nominated anyone, and the value of the certificate is up to Rs. 1,00,000, the payment can be made to the legal heirs of the deceased holder. This can be done even without requiring a Probate, Letter of Administration, or Succession Certificate.
3. Important Note: The Supreme Court has ruled that if an individual holding a NSC (or similar certificate) is deceased and no nomination is present, the proceeds will be distributed among the persons entitled to the succession according to legal norms, customs, or the deceased’s will. The nomination is not the sole determining factor for distribution.
4. Revised Scheme (from 12.12.2019): Under the new scheme introduced on December 12, 2019, if no nomination exists and the payment amount is up to Rs. 5 lakhs, it can be made to the rightful claimant even without requiring a probate, succession certificate, or other formal documentation. This can be done based on specific documents such as a death certificate, the original passbook or deposit receipt, an affidavit, a letter of disclaimer, and a bond of indemnity.
5. Amount Exceeding Rs. 5 Lakhs: If the payment amount exceeds Rs. 5 lakhs, a Succession Certificate becomes mandatory. In such cases, along with the claim form, the passbook, and the death certificate of the account holder, a Succession Certificate must be provided.

NSC Passbook

The NSC (National Savings Certificate) is issued in a specific format that is printed directly onto a passbook. This passbook is authorized by an official signatory. This format ensures the legitimacy and authenticity of the certificate.

Min and Max Deposits in NSC

Starting from December 12, 2019, the NSC VIII issue account can be initiated with a minimum deposit of Rs. 1000, and subsequent deposits can be made in multiples of Rs. 100. There is no upper limit on the amount that can be deposited into this account. Moreover, individuals have the flexibility to open multiple NSC accounts as per their requirements. There is no maximum limit to invest in National Saving Certificates.

NSC Interest Rates 2023

The following table provides a summary of the interest rates and compounding frequencies for National Savings Certificates (NSC) based on the date of issuance. NSCs, being savings instruments, offer varying interest rates that are compounded at different intervals.

The current rate of interest on NSC is 7.7%. (w.e.f. 1-4-2023) – Check Latest Interst Rate Here

Issue Date Range	Interest Rate (%)	Compounding Frequency
From April 2023 Onward	7.7%	Yearly
W.e.f. 1-1-2023	7%	Yearly
April 1, 2020 – Dec 31, 2022	6.8	Yearly
July 1, 2019 – Mar 31, 2020	7.9	Yearly
Oct 1, 2018 – June 30, 2019	8.0	Yearly
Jan 1, 2018 – Sep 30, 2018	7.6	Yearly
July 1, 2017 – Dec 31, 2017	7.8	Yearly
April 1, 2017 – June 30, 2017	7.9	Yearly
Prior to April 1, 2016	Varies	Half-yearly

NSC Calculator: Calculate NSC Interest & Maturity Amount

Here’s the provided information organized in a clearer format: The amount of interest accuring on a certificate of Rs. 100 is as follows:

Year	I	II	III	IV	V
Certificates issued from 1.4.2017 to 30.6.2017	7.90	8.52	9.20	9.93	10.70
Certificates issued from 1.7.2017 to 31.12.2017	7.80	8.41	9.06	9.77	10.55
Certificates issued from 1.1.2018 to 30.9.2018	7.60	8.18	8.80	9.47	10.19
Certificates issued from 1.10.2018 to 30.6.2019	8.00	8.64	9.33	10.08	10.88
Certificates issued from 1.7.2019 to 11.12.2019	7.90	8.52	9.20	9.93	10.70
Interest Accrued of Rs. 1000 (w.e.f. 12-12-219)
Certificates issued from 12.12.2019 to 31.3.2020	79.00	85.24	91.98	99.24	107.08
Certificates issued from 1.4.2020 to 31.12.2022	68.00	72.62	77.56	82.84	88.47
Certificates issued on or after 1.1.2023	70.00	74.90	80.14	85.75	91.76

An annual interest accrual certificate can be obtained from the accounts office upon request by the account holder. The calculation of interest for certificates of different denominations will be proportional to the amounts mentioned above. The provided table aids in the quick calculation of accrued interest for various years. This assists individuals in determining their interest earnings promptly.

NSC Accrued Interest Rates Chart

This table displays the NSC accrued interest rate chart, allowing you to review the accrued interest on NSC from April 1, 2017.

	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27	2027-28
1-4-17 to 30-6-17	7.90	8.52	9.20	9.93	10.70	x	x	x	x	x
1-7-17 to 31-12-17	7.80	8.41	9.06	9.77	10.55	x	x	x	x	x
1-1-18 to 31-3-18	7.60	8.18	8.80	9.47	10.19	x	x	x	x	x
1-4-18 to 30-9-18	x	7.60	8.18	8.80	9.47	10.19	x	x	x	x
1-10-18 to 31-3-19	x	8.00	8.64	9.33	10.08	10.88	x	x	x	x
1-4-19 to 30-6-19	x	x	8.00	8.64	9.33	10.08	10.88	x	x	x
1-7-19 to 11-12-19	x	x	7.90	8.52	9.20	9.93	10.70	x	x	x
12-12-19 to 31-3-20 (Rs.1000)	x	x	79.00	85.24	91.98	99.24	107.08	x	x	x
1-4-20 to 31-3-21	x	x	x	68.00	72.62	77.56	82.84	88.47	x	x
1-4-21 to 31-3-22	x	x	x	x	68.00	72.62	77.56	82.84	88.47	x
1-4-22 to 31-12-22	x	x	x	x	x	68.00	72.62	77.56	82.84	88.47
1-1-23 to 31-3-23	x	x	x	x	x	70.00	74.90	80.14	85.75	91.76

NSC Post-Maturity Interest

If, after your investment reaches its maturity date, the money you’re supposed to receive hasn’t been paid yet, the investment will start to earn extra interest. This extra interest will accumulate from the maturity date until the day you finally receive your payment. The interest rate for this extra period will be the same as the prevailing interest rate for a regular savings account.

Scenario:

Maturity Date Has Passed: When the date on which your investment is supposed to mature, it means that the specified period for your investment has ended.

Payment Delayed: Sometimes, even though your investment has reached its maturity date, the payment you’re supposed to receive doesn’t happen immediately.

Earning Additional Interest: In such cases, the investment doesn’t just sit there. It starts to earn something extra. This extra earning is called “post-maturity interest.”

Interest Accumulation Period: This post-maturity interest begins to accumulate from the exact day your investment matured. It continues to accumulate until the day when you eventually receive your payment.

At the Regular Savings Rate: The rate at which this additional interest grows is the same as the interest rate applied to a regular savings account. This rate is called the “prevailing POSB A/c rate.”

In Simple Terms: So, in simpler terms, if your investment becomes due for payment after its maturity date but you don’t receive the money right away, the investment will start earning extra interest from the maturity date until you get your payment. This extra interest is calculated using the same interest rate as a normal savings account.

Sure, here’s the breakdown of the provided information with subheadings:

Understanding the Maturity Period and Payable Amount

When you invest in a certificate, it takes a certain amount of time to fully mature. This means that after a set duration, you can receive your invested amount along with any interest that has accumulated.

Time Frame for Maturity: For these certificates, the maturity period is set at five years. This means that from the day you initially deposit your money, you’ll have to wait for a total of five years before the certificate matures.

Amount on Maturity: When the certificate matures, you will receive a specific amount of money. This amount is determined based on the denomination of the certificate and the time it was issued.

Different Amounts for Different Periods: The exact amount payable on maturity varies depending on when the certificate was issued.

• For certificates issued from April 1, 2017, to June 30, 2017: Rs. 146.25
• For certificates issued from July 1, 2017, to December 31, 2017: Rs. 145.58
• For certificates issued from January 1, 2018, to September 30, 2018: Rs. 144.23
• For certificates issued from October 1, 2018, to June 30, 2019: Rs. 146.93
• For certificates issued from July 1, 2019, to December 11, 2019: Rs. 146.25
• For certificates issued from December 12, 2019, to March 31, 2020 (with denomination of Rs. 1000): Rs. 1,462.54
• For certificates issued from April 1, 2020, to December 31, 2022 (with denomination of Rs. 1000): Rs. 1,389.49
• For certificates issued on or after January 1, 2023 (with denomination of Rs. 1000): Rs. 1,402.55

Rounding Off Rule: The amount you receive upon maturity will be rounded off to the nearest rupee. This means that any fractional amount will be adjusted to the nearest whole rupee value.

Encashment of Certificates

When a certificate reaches its maturity date, it becomes possible to convert it into cash. This process is called “encashment.”

Where to Encash: You can encash your certificates at the post office where they were initially registered. Additionally, you have the option to encash them at any other post office located within India.

Verification Step: Before you can encash the certificates, the person in charge at the post office where the certificates were initially registered needs to confirm that you are indeed entitled to receive the payment.

Ensuring Rightful Recipient: This verification step is crucial to ensure that the rightful owner is receiving the payment upon maturity.

In simple terms, when your certificates mature, you can turn them into cash. You can do this at the post office where they were registered or at any other post office in India. However, before the payment is made, the post office will verify that you are the rightful recipient.

Sure, here’s the breakdown of the provided information:

Premature Encashment of NSCs

Premature encashment means cashing in your investment before it has reached its full maturity period. This is allowed under specific circumstances.

Circumstances for Premature Encashment

You can encash your certificate before the full 5-year maturity period in certain situations. These situations include:

1. Death of the Holder(s): If the certificate holder passes away.
2. Forfeiture by a Gazetted Government Officer: If a pledgee who is a high-ranking government officer orders the forfeiture.
3. Court’s Order: If a court issues an order for the encashment.

Interest Payment Rules

• No Interest Within One Year: If you encash your certificate within the first year, you won’t receive any interest payment.
• Interest Between One and Three Years: If you encash between one year and three years, you’ll receive some interest. This interest is calculated at the POSB (Post Office Savings Bank) rate, which is currently 4.0%, but only for the initial six months of this period.
• Completed  Three Years: If you decide to encash your certificate after three years but before the full maturity of five years, the amount you receive will be calculated based on specific rules.

Pre-Encashment Table for Certificates: If you decide to cash in a National Savings Certificate (NSC) worth Rs. 1000 after three years, here’s what you can get:

Completed Period (Yrs.)	Certificate issued 1.7.2017 – 31.12.2017	Certificate issued 1.1.2018 – 30.9.2018	Certificate issued 1.10.2018 – 30.6.2019	Certificate issued 1.7.2019 – 11.12.2019	Certificate issued 12.12.2019 – 31.3.2020	Certificate issued 1.4.2020 – 31.12.2022	Certificate issued w.e.f. 1.1.2023
3	1218.20	1211.40	1225.00	1221.60	1221.61	1184.89	1191.02
3-1/2	1258.90	1250.70	1267.20	1263.20	1263.05	1218.15	1226.23
4	1301.00	1291.30	1310.80	1305.90	1305.90	1252.98	1262.48
4-1/2	1344.50	1393.20	1355.90	1350.20	1350.20	1288.80	1299.80

In simple terms, you can withdraw your investment before it’s supposed to mature, but only in certain situations. If you do this within the first year, you won’t get any extra money. If you do it between the first and third years, you’ll get some interest at a specific rate. After three years but before five, the amount you get will follow certain rules.

Transferability of NSCs

Transfer Timing: Transfer of NSCs is allowed after one year from the date of the certificate. To initiate the transfer, an application needs to be submitted to the Postmaster/Bank, and the transfer needs to be registered.

• Conditions for Early Transfer: Transfers within the first year are permitted only under specific circumstances. These include transferring to a close relative out of natural affection, to the heir of a deceased holder, under a court order, or in cases of pledging.
• Limitation on Transfers: A certificate can only be transferred once, from the issuance date to the discharge date of the certificate.
• Transfer Process: When a transfer occurs, the name of the previous holder is crossed out, and the name of the new holder is written under the dated signature of an authorized Post Master/Bank official, along with their designation and date stamp.
• Revised Transfer Rules (W.e.f. 12.12.2019): Under the new scheme introduced on December 12, 2019, transfers are permitted in case of death to other joint holders, legal heirs, nominees, or as per court orders. Transfers can also be made through pledging, provided the transferee meets the eligibility criteria to open an account under the scheme.
• Electronic and Passbook Mode Transfers: For NSCs issued in electronic or passbook mode, transfers are allowed after proper verification, updating the electronic database, canceling the old passbook (if applicable), and issuing a new passbook in the transferee’s name.

Income Tax Benefit for NSC-VIII Issue

• Investment Deduction: The amount you invest in NSC-VIII Issue, along with investments in PPF, LIC, and similar schemes, up to a maximum of Rs. 1,50,000, qualifies for a deduction under section 80C of the Income Tax Act.
• Interest Accrual Benefit: The interest that accumulates during the year (excluding the last year) is considered reinvested and is also eligible for deduction under section 80C.
• No TDS on Repayment: There is no requirement for Tax Deducted at Source (TDS) on the repayment of the NSC-VIII Issue amount.