National Savings Scheme (NSC)


What is National Savings Certificate? National Savings Certificate is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public.
  National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while (i) Investing, (ii) during the life and (iii) at the time of maturity of the Investment.
Investment limit There is no Limit for Investment in NSC.
Tax treatment  Deposits  up to Rs.1 lakh  in NSC qualify for Deduction Section 80C of the Income Tax Act. Accrued interest on NSC also qualify for deduction u/s. for first five years.
  NSC interest is taxable. However, as it is a cumulative scheme (e.g. interest is not paid to the investor but instead accumulates in the account), each year’s interest for the first 5 years is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Sec 80C, thereby making it tax-free. Only the final year’s interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the earlier years and the capital amount
What you must ensure while filing tax return To benefit from this feature of reinvested interest and its deduction, it is important to declare the accrued interest on NSC on a yearly basis in your tax return under the head “Income from Other Sources”. Under deductions, you will claim accrued interest for first five years  under Sec 80C as reinvested NSC interest. Both cancel each other out, making the interest in effect tax-free.
Non-Resident Cannot Invest Non-Resident Indians are not eligible to purchase the National Savings Certificates
Denominations in which certificates shall be issued The National Savings Certificates (IX Issue) shall be issued in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000.
Can be Purchased Jointly and on behalf of minor (1)  The certificates shall be of the following types, namely
  (a)  Single Holder Type certificates;
  (b)  Joint ‘A’ Type Certificates; and
  (c)  Joint ‘B’ Type Certificates;
  (2)  (a)  A Single Holder Type certificate may be issued to an adult for himself or on behalf of a minor or to a minor;
  (b)  A Joint A Type certificate may be issued jointly to two adults payable to both the holders jointly or to the survivor,
  (c)  A Joint ‘B’ Type certificate may be issued jointly to two adults payable to either of the holders or to the survivor;
Where to Purchase National Savings Certificates (NSC) are certificates issued by Department of post, Government of India and are available at most post offices in the country. This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.
Main Features of  NSC VIII Issue Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
  No maximum limit for investment.
  No Tax deduction at source.
  Certificates can be kept as collateral security to get loan from banks.
  Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
  Trust and HUF cannot invest.
  Rate of interest 8.50%. ( FY 2014-15) There is no change in the interest rate when compared for FY 2013-14
  Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 and upto 31.03.2013  shall be INR. 152.35 after 5 years.
Main Features of  NSC IX Issue No maximum limit for investment.
  INR. 100/- grows to INR 234.35 after 10 years.
  Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
  A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.
  Rate of interest 8.80%. (for FY 2014-15)  there is no change in the rate when comapred for FY 2013-14
  Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012  and upto 31/03/2013 shall be INR. 238.87 after 10 years.
  Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax – On retirement it will fetch you monthly pension as the NSC matures.

Note: Interest rates and other terms and condtions related to NSC is subject to change 

Small savings rates for FY 2015-16 announced

The government today announced key small savings rates for the new fiscal, 2015-16, that starts from 1st April,2015


Public Provident Fund: 8.7 percent (unchanged from FY15)

Kisan Vikas Patra: 8.7 percent (unchanged)

10 year National Savings Certificate: 8.8 percent (unchanged)

5 year NSC: 8.5 percent (unchanged)

5 year Monthly Income Scheme: 8.4 percent (unchanged)

5 year time deposit: 8.5 percent (unchanged)

5 year recurring deposit: 8.4 percent (unchanged)

1-3 year time deposits: 8.4 percent (unchanged)

Savings deposit - 4 percent (unchanged)

The government annoucned changes in two schemes:

5 year Senior Citizen Saving Scheme: increase from 9.2 percent to 9.3 percent

Sukanya Samriddhi Account Scheme: increase from 9.1 percent to 9.2 percent

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