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National Savings Certificate

The National Saving Certificate (NSC) is a government-backed, fixed-income savings scheme available through Indian post offices. NSC (National Saving Certificate Scheme) is one of the most popular investment schemes offered by post offices across India. It is a government-backed scheme that allows you to build a disciplined saving habit and earn a fixed income. If you are a risk-averse investor, knowing the NSC full form and other details can greatly help you earn a secure return and save taxes.

  • 18,343 Views | Updated on: May 15, 2025

What is NSC (National Saving Certificate)?

The National Saving Certificate or NSC is a fixed-income savings scheme that you can open with any Indian post office branch. It is a low-risk investment and saving option offered by the Government of India that encourages budding investors and people with small to medium incomes to invest and grow their wealth.

The following table offers more clarity on what is National Saving Certificate and its key details:

NSC interest rate 2024 7.7% compounded annually (payable at maturity)
Minimum Investment Amount ₹1000 and thereafter in multiple of ₹100
Maximum Investment Amount NIL
Maturity Period 5 years
Degree of Risk Low-risk investment
Tax Benefit Available under Section 80C of the Income Tax Act up to ₹1.5 lakhs

Who Should Invest in NSC?

Who would not want to invest in a scheme offering attractive interests and tax benefits while also maintaining the security of investment? However, if you want to get started with this scheme, you should check whether you meet the eligibility criteria set by the government. In other words, you must be:

An Indian Resident Individual

This means that non-residents are not permitted to invest in NSC. Further, all entities other than individuals, i.e., Hindu Undivided Families (HUFs), Trusts, Companies, etc, are not allowed.

Above 10 years of age

In case of minors (those in the age range of 10-18 years), guardians can invest in the scheme. Similarly, in the case of a person with an unsound mind, assistance of a guardian is required.

Top Features and Benefits of the National Saving Certificate

The National Saving Certificate comes with several benefits for investors. For instance, liquidity is of great value to an individual with a medium or low income. NSC benefits allow such investors to access their money at all times. Other benefits include the following:

Guaranteed Return (Fixed Income)

Investment in NSC helps generate fixed income through interest on the sum invested. For example, you can generate a guaranteed return on the NSC at a rate of 7.7% through the government’s regularized interest rate on the National Savings Scheme. This interest rate is revised on a quarterly basis.

Tax Benefit on NSC

When you invest money in the National Saving Certificate, you can claim tax benefits on investments of up to ₹1.5 lakhs. The claims are subject to Section 80C of the Income Tax Act, 1961. You should also note the NSC interest taxability rules here. The interest earned is subject to tax under ‘Income from Other Sources’ but only at the end of 5 years.

Small Investment Option

You can start investing in the National Saving Certificate Scheme with a small initial investment of ₹1,000 or any amount above that is a multiple of ₹100. After that, you can increase your investment amount when feasible.

Maturity Period

The National Saving Certificate has a mid-term maturity period of five years. It is thus suitable for long-term financial planning purposes.

Compounding Benefits

The interest rate on the National Saving Certificate Scheme allows you to get regular returns. The better part is that the interest earned on the NSC gets auto-compounded and re-invested yearly.

National Saving Certificate Tax Benefits

Subscribing to the NSC with an investment of up to ₹1.5 lakhs can result in tax savings under Section 80C. The interest received on the certificates is added to the initial investment and comes under tax deduction.

For example, if you purchase ₹1,000 in certificates, you are eligible for a tax credit on that original investment amount in the first year. However, in the second year, you can claim a tax deduction for the NSC investment(s) and the interest received in the first year.

Best Alternatives for National Savings Certificate

NSC is a reliable and safe savings scheme, making it a great investment option for low-risk investors. However, if you are a high-risk investor, there are a few other options that you can explore. Some of these options might pose a little more risk but are worth considering for your financial growth in the long term.

Unit Linked Insurance Plans (ULIPs)

ULIPs are modern investment tools with dual insurance benefits and investments in the same plan. They allow the policyholder to invest in a market-linked security based on their risk appetite. For example, a policyholder can opt for safer investment options like bonds if they have a low-risk appetite.

Guaranteed Savings Plan

If you are looking for more options for the National Savings Scheme, you can consider the guaranteed savings plan option. In this plan, you must ensure that you invest a fixed amount every month or year for a fixed term. After this fixed term, you will get returns pre-decided at the start of the policy.

Comparing NSC with Other Tax-saving Investments

Regarding tax-saving investments, the National Savings Certificate (NSC) is one option among several others. Let’s compare NSC with some popular tax-saving investments available in the market.

Investment Option Risk Return Maturity or Lock-in Period
NSC Low 7.7% p.a. 5 years
PPF Low 7.1% p.a. 15 years
ELSS Market-linked Market-linked 3 years
FD Low 7%-8% p.a. 5 years
ULIP Market-linked Market-linked 5 years
EPF Low 8.25% Withdrawal upon retirement
(specific rules prescribed for early withdrawal)

Public Provident Fund (PPF)

PPF is a long-term investment plan with a long maturity period. The interest rate is variable and compounded annually, offering higher flexibility regarding investments and withdrawals. While the NSC is a fixed-income instrument with a maturity period, the NSC interest rate is fixed and compounded annually.

Equity-Linked Saving Scheme (ELSS)

ELSS is a type of mutual tax-saving fund that is primarily financed in equities. It has the potential for higher returns but also carries higher market risk. On the other hand, NSC is a risk-free investment with a fixed interest rate. It does not offer any exposure to equity markets.

Tax-Saving Fixed Deposits (FDs)

Tax-saving FDs are offered by banks for a fixed tenure. The interest earned is taxable. They provide fixed returns and are relatively safer. NSC is issued by the government and is considered a safe investment. For NSC, interest earned is compounded annually, but TDS is not applicable.

Unit Linked Insurance Plans (ULIPs)

ULIPs are life insurance-cum-investment plans. They offer market-linked returns and life insurance coverage. On the other hand, NSC is a savings instrument and does not provide life insurance coverage.

Employee Provident Fund (EPF)

EPF is a retirement scheme for salaried individuals. It offers tax benefits and employer contributions. On the other hand, NSC is open to all individuals and is not tied to employment.

How to Invest in NSC?

National Savings Certificate, or NSC, is designed to encourage small—to mid-income investors to invest while saving on taxes. Let us see how to invest in NSC, both offline and online:

Steps to Invest in NSC Offline

1. Visit a Post Office

Head to the nearest post office that offers NSC investments. Almost all major post offices across India provide this facility

2. Fill the Application Form

Obtain the NSC application form from the post office. Fill in all required details, such as your name, address, PAN number, and the amount you wish to invest.

3. Provide Required Documents

Submit the filled application form and necessary documents for compliance with KYC (Know Your Customer). This typically includes

  • Proof of Identity (Aadhaar card, Passport, Voter ID, etc.)
  • Proof of Address (Utility bills, rental agreement, etc.)
  • Passport-size photographs

4. Choose Nominee

Nomination is mandatory for NSC investments. Ensure you fill out the nominee details on the application form.

5. Make Payment

Pay the investment amount. You can make payments via cash, cheque, or demand draft. The post office will issue an acknowledgment receipt upon receiving the payment.

6. Receive NSC Certificate

After processing your application and payment, the post office will issue an NSC certificate in your name. Keep this certificate safe, as it will be required at maturity.

Steps to Apply for NSC Online

1. Log in to Your Internet Banking Account

Access your Internet banking account of a bank that offers NSC investment services. Ensure your bank is authorized to provide this service.

2. Navigate to the NSC Investment Section

Once logged in, look for the option related to government schemes or fixed-income investments. Under this, find the NSC investment option.

3. Fill in Investment Details

Enter the investment amount and nominee details. The online form will require details like the offline process, including personal and nominee information.

4. Upload Documents

Upload scanned copies of the required KYC documents. These may include:

  • Proof of Identity
  • Proof of Address
  • PAN card

5. Make Payment

Proceed to make the payment online through your Internet banking account. Ensure you have sufficient balance to complete the transaction.

6. Confirmation and Receipt

After completing the payment, you will receive an online confirmation. The NSC certificate will be issued digitally and can be downloaded from your internet banking account. Additionally, an email confirmation might be sent to your registered email address.

What Documents are Required to Apply?

Previously, physical NSC certificates were issued by banks or post offices. However, this practice was discontinued in 2016. Now, NSC certificates can be purchased in either Passbook or electronic mode (e-mode).

The passbook mode is less popular and more tedious. You must open a savings account at an authorized bank or post office. In contrast, e-mode is more convenient. You can purchase an NSC scheme with your savings account online, provided you have activated your Internet banking. You will require the following documents to apply for NSC:

  • ID proof, such as a PAN number, passport, senior citizen ID, driver’s license, or any other identification provided by the government
  • Your photograph.
  • Proof of residence, such as passport, phone bill, electricity bill, or bank statement.

Who Should Invest in a National Saving Certificate?

While NSCs offer several benefits, they may not be suitable for everyone. It is important to consider your personal financial goals, risk tolerance, and investment strategy before investing in any financial product. Here’s who should consider investing in NSCs:

Conservative Investors

NSCs are ideal for those with a low-risk appetite who prefer guaranteed returns over potentially higher but riskier investments. For instance, older individuals who prioritize capital protection and steady returns may find NSCs suitable for their needs.

Tax-saving Seekers

As discussed above, investments in NSCs qualify for tax deductions under Section 80C of the Income Tax Act. It is thus an attractive for individuals looking to reduce their tax liability.

Middle-income Earners

NSCs offer a balance of safety, returns, and tax benefits that can be particularly appealing to middle-income individuals.

Long-term Planners

With a 5-year lock-in period, NSCs are suitable for those who can commit their funds for the medium to long term.

First-time Investors

The simplicity and safety of NSCs make them a good starting point for those new to investing.

Diversification Seekers

Investors looking to balance their portfolio with a low-risk, fixed-income component can benefit from NSCs.

Rural and Semi-urban Investors

NSCs are widely available through post offices, making them accessible to investors in areas with limited banking facilities.

Eligibility Criteria to Invest in National Saving Certificate

Like a savings plan, the National Savings Scheme also has eligibility criteria. The eligibility criteria to invest in the National Saving Certificate Scheme are as follows:

  • One must have Indian citizenship
  • Individual adults or a joint group of 3 adults can invest
  • Guardians can invest on behalf of the minor child/children or for a person of unsound mind
  • Minors above the age of 10 years can invest in their name

How to Request a Duplicate National Savings Certificate?

You can request a duplicate if your original NSC certificate is damaged, lost, stolen, destroyed, or mutilated. To do so, you must fill out the savings certificates form and give it to the post office where the original NSC was issued. The form’s primary fields are as follows:

  • The certificate(s)’ serial numbers, denominations, NSC issue, and other details.

  • The date on which the certificates were purchased.
  • The purpose of requesting a duplicate certificate must be stated, along with any additional information.

What are the Maturity Period and Premature Withdrawal Rules for NSC?

Although the National Savings Certificate scheme has a lock-in period of 5 years, premature withdrawal is permitted under certain conditions:

  • If the NSC holder or holders (in the case of joint holders) pass away.
  • If there is a court order mandating the withdrawal.
  • If a Gazetted Government Officer pledges the account to be forfeited, and the pledge complies with NSC rules.

If the NSC is withdrawn within one year of opening the account, no interest will be paid, and only the initial investment amount will be returned. However, if the withdrawal is made after one year, the principal amount and the accrued interest will be paid.

Conclusion

Beyond its basic benefits, NSC also serves as a solid option for those seeking long-term financial stability. As part of a well-diversified portfolio, NSC can provide the security and assurance that many other investment options may not. However, it is important to remember that NSC is just one part of a broader financial strategy. To maximize your overall returns and future security, you should complement NSC with other investment avenues like mutual funds, ULIPs, or even public provident funds.

Taking a diversified approach ensures that you safeguard your wealth, create potential for higher growth, and adapt to changing financial needs over time.

FAQs on National Savings Certificate

1

How to show NSC interest in income tax?

You can claim a deduction for the interest earned on NSC under Section 80C of the Income Tax Act. The interest earned on NSC is taxable in the fifth year of maturity, so you must declare it as income in your ITR.

2

NSC comes under which section?

NSC comes under Section 80C of the Income Tax Act. This means you can claim a deduction of up to ₹1.5 lakhs for the amount invested in NSC.

3

NSC or KVP? Which is better?

NSC and KVP (Kisan Vikas Patra) are government-backed savings schemes, but NSC offers a higher interest rate. The interest rate on NSC is currently 7.7%, while the interest rate on KVP is 7.5%.

4

How to redeem NSC certificates after maturity?

You can redeem NSC certificates after maturity at any post office or bank. You will receive the maturity amount, which includes the principal amount and the interest earned.

5

How to get an NSC certificate?

You can get an NSC certificate from any post office or bank. You must provide your PAN card, address, and proof of identity.

6

How long does it take for NSC to provide a maturity amount double the principal amount?

At the current interest rate of 7.7%, it will take about 20 years for NSC to provide a maturity amount double the principal amount.

7

How to check the NSC certificate online?

To check the NSC certificate online, log in to your internet banking account if your bank offers NSC services. Look for the option related to government schemes or fixed-income investments, where you should find the NSC investment section.

8

Does NSC provide tax benefits u/s 80c?

NSC provides tax benefits under Section 80C of the Income Tax Act. You can claim a deduction of up to ₹1.5 lakhs for the amount invested in NSC.

9

How to find the NSC certificate number?

To find the NSC certificate number, refer to the physical certificate issued by the post office where you made the investment. It should be prominently displayed on the certificate itself.

10

How to withdraw NSC before maturity?

You can withdraw NSC before maturity, but you must pay a penalty. The penalty is calculated as a percentage of the interest you would have earned if you had kept the NSC until maturity.

11

What is the minimum amount for NSC?

The minimum amount for National Savings Certificate (NSC) investment is typically set at ₹100, although this may vary depending on the issuing authority.

12

How to verify an NSC certificate?

To verify an NSC certificate, you can visit any post office and provide the certificate number and holder’s details.

13

How to Buy NSC Online?

To buy NSC online, you can typically do so through authorized banking channels offering government scheme investments. Log in to your Internet banking account, navigate to the NSC investment section, fill in the required details, upload the necessary documents, pay, and receive your NSC certificate digitally.

14

Is there a lock-in period with investment in NSC?

Yes, there is a lock-in period of 5 years with investment in NSC.

15

How is NSC interest calculated?

NSC interest is compounded annually and added to the principal amount.

16

Is there a denomination smaller than ₹100?

No, the smallest denomination for NSC is ₹100.

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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