Independent guide. Money Schemes is not a government website and does not take applications or payments. Apply only on the official portal, at a post office, a bank branch or a Common Service Centre.
The NSC scheme is a 5 year post office certificate that pays 7.7% interest, added once each year, with the whole amount paid at maturity and the deposit eligible for a tax deduction under the old regime. At the current rate, 1 lakh grows to about 1,44,903 rupees in five years.
The full form of NSC is National Savings Certificate (NSC). The present series is the VIII Issue, issued by the Ministry of Finance and sold at post offices. There is no upper limit and repayment is the government's own promise. The trade off is a firm lock: you cannot cash it early by choice.
At a glance
Run by
Ministry of Finance, through post officesInterest
7.7% a year, compounded yearly, paid at maturityTerm
5 yearsDeposit
From 1,000 rupees in steps of 100; no upper limitTax
Deposit deductible under the old regime, up to 1.5 lakh a year with other itemsEarly closure
Only on death, pledge forfeiture or court orderWhere
Any post office with savings work
What is NSC and what does the name mean
NSC meaning in one line: you lend money to the Union government for five years through the post office and receive it back with interest on top. The National Savings Certificate is not a bank deposit and not a share. It is a small savings instrument whose rate is fixed by the government every quarter.
Once you buy, the rate in force on that day stays with your certificate for all five years. If rates fall next quarter, your certificate is not affected. Today the NSC certificate is held in electronic form, and you receive a passbook or an account statement as proof.
How the nsc scheme adds interest
Interest is calculated once a year and added to the balance, so the next year earns interest on the larger sum. Nothing is paid out during the term. At the end of year five you receive the deposit plus all interest. For October to December, the rate is 7.7%.
| End of year | Value of 10,000 rupees | Value of 1 lakh |
|---|---|---|
| 1 | 10,770 | 1,07,700 |
| 2 | 11,599 | 1,15,993 |
| 3 | 12,492 | 1,24,924 |
| 4 | 13,454 | 1,34,544 |
| 5 (maturity) | 14,490 | 1,44,903 |
For your own amount, use the NSC calculator. The history of the rate is on the NSC interest rate page.
Who can buy NSC in post office
- An adult buying for personal use.
- Up to three adults jointly. In a Joint A account the money is paid to all holders together. In a Joint B account it is paid to any one of them. Survivors get the money in both cases.
- A parent or legal guardian on behalf of a minor, or of a person who is mentally unsound.
- A child who has turned 10 can hold one personally.
There is no limit on the number of certificates. Non resident Indians cannot buy new certificates, and trusts and Hindu Undivided Families are not covered.
Steps to buy a post office NSC
- Ask for the NSC application form and enter the amount and the nominee's name.
- Attach a photocopy of Aadhaar and of PAN. Without PAN, fill Form 60 and give PAN later.
- Give two passport size photos and show the originals of your papers.
- Payment by cash or cheque is accepted, and a post office savings account can also be debited. If the savings account has internet banking, the certificate can be bought online too.
- Check the passbook entry: name, date, amount and the maturity date five years ahead.
There is no separate NSC website for buying. The rules are published by the National Savings Institute and India Post, and the purchase happens at the post office or through India Post internet banking.
Tax rules for the post office NSC scheme
Under the old tax regime, the amount you invest counts toward the deduction known as Section 80C, within the 1.5 lakh yearly ceiling shared with your other eligible items. The new Income tax Act moves this deduction to a new section number with the same limit. The new tax regime does not give it.
Interest is taxable, but there is a twist. Each year's interest from the first to the fourth year is deemed to be put back into the certificate, so in the old regime it can be shown as income and claimed again as a fresh deduction in the same year. Only year five interest is received in cash. Ask a tax practitioner how to show this in your return.
Can NSC be closed early or pledged
The certificate cannot be closed early just because you need the money. Early closure is allowed only on the death of the holder or any joint holder, on forfeiture by a gazetted officer holding it as pledgee, or on a court order. Closed within one year, only the deposit is returned. Between one and three years, you get the savings account rate for the complete months held. After three years, the official premature table applies.
NSC can be pledged as security for a loan with a bank, cooperative society, government company or approved housing finance company. On a holder's death, nominees can claim the money or continue the certificate till maturity.
NSC compared with KVP and PPF
| NSC | KVP | PPF | |
|---|---|---|---|
| Rate now | 7.7% | 7.5% | 7.1% |
| Lock in | 5 years | 2.5 years | 15 years, part withdrawal later |
| Yearly limit | None | None | 1.5 lakh |
| Tax on interest | Taxable | Taxable | Tax free |
Read more on Kisan Vikas Patra and PPF. The choice depends on how long you can leave the money untouched and which tax regime you use.
Frequently asked questions
What is the NSC full form?
NSC stands for National Savings Certificate. The current series is the VIII Issue sold at post offices.
How much interest does NSC pay now?
Certificates bought in October to December earn 7.7%, with interest built up each year and paid out only at maturity. The rate on your purchase date stays fixed.
Can I get NSC in post office online?
Yes, if you have a post office savings account with internet banking. Otherwise buy it at the counter.
Is there a maximum limit in the NSC scheme in post office?
No. You can invest any amount, but only up to 1.5 lakh a year, together with other items, counts for the old regime deduction.
Can I break NSC before 5 years?
Not by choice. Only death, forfeiture by a pledgee or a court order allow early closure.
Is NSC interest taxable?
Yes. Years one to four count as reinvestment and qualify for the old regime deduction too. Fifth year interest is taxed when it is paid.
Official sources
- National Savings Institute: National Savings Certificates (VIII Issue) Schemewww.nsiindia.gov.in
- India Post: savings schemesapp.indiapost.gov.in
- Income Tax Departmentwww.incometaxindia.gov.in
Rules, amounts and portals can change. Check the official source before you apply or deposit.