What is National Savings Certificate (NSC) Scheme? Interest Rate & Features

What is National Savings Certificate?

National Savings Certificate (NSC) is an investment option that encourages people to save money in the long term. It is a government-backed scheme offered by the Post Office and allows people to invest as little as Rs 1000 as an initial investment. NSCs are popular among small investors because they offer guaranteed returns and low risk, making them an ideal choice for those looking to grow their savings over time.

The certificates can be held for under five years, during which interest is compounded annually. Investors can purchase any number of certificates with no maximum limit, however, investing a maximum of Rs.1.5 lakh can enable you to reap the benefits of a tax deduction under Section 80C. of the Income Tax Act. The interest rate on NSCs changes from time to time though it typically ranges from 6%-8%.

What is the Latest National Saving Certificate Interest Rate?

The National Savings Certificate interest rates, established and monitored by the government, undergo a quarterly update. The interest rate of the National Savings Certificate is 7.7% per annum for Q1 FY 2023-24, compounded yearly.

The minimum investment that must be made for a National Savings Certificate is Rs 1,000 and in multiples of Rs. 100. There is no upper limit. Your amount will mature after 5 years from your deposit date, and pledging that investment can also help you get a bank loan.

Who Should Invest in NSC?

Investing in NSCs is suitable for those who want to create small savings over time, as it provides high interest rates with minimal risk. The lock-in period of five years also makes it attractive to investors looking to save money for their future goals, such as retirement or children’s education. The main features of NSC include complete capital protection and a guaranteed interest rate.

The Government of India clearly mentions that this scheme is only for Indian citizens, and hence the following people might not be eligible to invest in NSCs:

  • Public or Private Firms
  • NRIs (Non-Resident Indians)
  • Undivided Hindu Families
  • Trusts or Non Profit Organziations

Features of NSC

  1. Fixed Income:

    Fixed income refers to the guaranteed returns generated by the NSC investments over a predetermined period of time. The interest rate on this fixed return depends on the tenure of the certificate and can range from 6-8%.

  2. Maturity Period:

    The maturity period refers to the duration during which you hold your NSC investment before it matures and can be anywhere between 5 to 10 years.

  3. Tax Savings:

    Tax savings through an NSC are available under Section 80C of the Income Tax Act as they offer tax benefits up to INR 1.5 lakh per annum.

  4. Flexibility:

    NSC is available in different denominations, making them extremely flexible from an investment point of view. Investors can choose from options ranging from Rs 100 all the way up to Rs 1 lakh depending on their financial goals and budget allocation.

  5. Accessibility:

    NSCs are easily accessible by anyone who wishes to invest in them through post offices or designated banks which makes them a far more convenient option than other investments.

  6. Loan Collateral:

    One distinct feature that sets NSC apart from other investments is its use as loan collateral. Banks accept NSC certificates as collateral when borrowers need loans against them. This allows investors to access funds quickly while still retaining their ownership in the certificate with no risk of losing out on the earnings they’ve accumulated thus far.

  7. Nomination:

    The nomination facility allows you to nominate someone else as the beneficiary of your NSC account in case you pass away before the certificate’s maturity. This ensures that your nominee will receive your maturity savings without hassle or delay.

  8. Power of Compounding:

    The power of compounding is a powerful asset of NSC. It allows investors to earn interest on the amount that they have already deposited in addition to the interest earned on their initial investment. This means that long-term investments with NSC can yield greater returns over time.

  9. Premature Withdrawal:

    Premature withdrawal is another feature of NSC which enables investors to cash in their investments early if needed. However, this is only possible in some exceptional cases like a court order or the death of the investor.

  10. Corpus on Maturity:

    The corpus on maturity feature allows investors to receive both their principal amount as well as accrued interest at once, making it easy for them to withdraw or reinvest their funds as they see fit.

Comparing NSC with Other Alternatives

As the demand for alternative investments continues to grow, investors must consider a variety of options. Investors need to understand how NSCs compare with the best savings plans in India before deciding which one is right for them.

Tax Savings Instrument

Lock-in Period


Interest Rate

Public Provident Fund

15 years



ELSS Funds

3 Years

Depends on Market Conditions

Completely Dependent on Market Conditions

Tax Saver Fixed Deposit

5 Years


5 to 7%


5 Years




How Freo Save Scales Against NSC?

NSC is a secure and low-risk product for risk-averse investors. It offers guaranteed returns on investments made, giving investors peace of mind as their money stays safe and earns interest.

However, if you are looking for a better alternative to save money while earning hefty interest rates, Freo Save is the answer. Freo Save offers high-interest savings accounts that can help you reach your savings goals faster than traditional methods. Our savings account provides various attractive features, such as 24/7 account access via our mobile app, fast transfers with no hidden fees or charges, and up to 7% interest rates on your savings. Additionally, you also get the same flexibility, security, and liquidity of a savings account.

Start saving smarter today with Freo Save – it’s more than just a safe option for your money – you’ll have greater control over your finances and better interest rates than NSC. Act now to take advantage of this new way to save and secure a better financial future for yourself!


Is NSC interest taxable every year?

The interest accrued on NSC is subject to taxation as “Income from Other Sources.” However, in the first four years, your earned interest will be reinvested, and hence you can claim it as a deduction under Section 80C of the ITA. The interest you make in the 5th year would attract taxes based on your tax slab.

Is there a maximum limit on NSC?

There is no maximum limit to the investment amount under NSC.

Can I withdraw from NSC before 5 years?

Withdrawing from NSC before 5 years will only be possible if the account holder dies or you have an order from the court.

What happens to NSC after maturity?

If the account holder does not withdraw the NSC maturity, the program converts to a post office savings scheme for two years. The post office will process the paperwork and issue a cheque, or they will obtain a cheque from the head office and hand it over to you within a few days.

Is it possible to get a loan against NSC?

Yes! You can pledge your NSC as collateral and get a loan against it.