Issued by the Central Government, the National Savings Certificate or NSC scheme is a popular investment instrument that offers guaranteed returns. This secured investment scheme comes with a lock-in period of 5 years, and the interest on the amount invested is compounded annually and paid out only at maturity.

Any Indian citizen residing in India can invest in the NSC scheme with a minimum deposit of Rs. 100. There is no upper limit to how much you can invest in this scheme. Adults can hold an NSC jointly, and parents and guardians of children and minors can invest in this instrument on their behalf. You can create an NSC by visiting any post office.

NSC interest Rate 2022

One of the primary reasons behind the success of this scheme is its significant interest return, which does not change once you open an NSC. For instance, if you started an NSC 4 years ago at an ROI of 7.9%, you would continue to receive this interest return until maturity. The NSC interest rate principle works like a fixed deposit, wherein you don’t only lock in the funds but also the rate of interest.

The current NSC interest rate is 6.8%. This ROI is up for revision every quarter. However, the government may or may not revise the NSC interest rate at the end of each quarter. 

Interest earned on premature withdrawal of NSC scheme

Typically, you cannot withdraw the invested amount from an NSC prematurely. However, there are a few special scenarios when you can withdraw the invested sum and still earn some National Savings Certificate interest rate. These include:

  • Nominees, or, in their absence, the rightful heirs can collect the NSC interest and principal prematurely if the original investor(s) passes away.
  • If an investor approaches the court stating a financial emergency that they wish to resolve using their NSC, and the court passes an order allowing the premature withdrawal.

The NSC interest rate on premature withdrawal is as follows:

  • If the investor withdraws funds before one year, they receive the entire principal amount but no interest return.
  • If the investor withdraws funds after one year, they receive the entire principal amount and earn the latest National Savings Certificate interest rate.

How to calculate the NSC maturity amount for different sums?

The quickest and most reliable way to calculate the compound interest for different NSC amounts is by using an online NSC interest calculator.

This tool allows you to toggle the investment amount as many times as you want in correlation with the pre-fixed NSC interest rate and tenure. You can find an NSC interest calculator online.

Here are the top benefits of using an NSC interest rate calculator:

  • An NSC interest calculator is user-friendly and saves you a tonne of time and effort in manually calculating the interest return.
  • You don’t have to worry about making an erroneous calculation when using an NSC interest calculator.
  • It costs nothing to use an NSC interest rate calculator. You’ll find this accurate tool readily available online for free.

Are NSC deposits monthly or a lump sum?

NSC deposits work on a lump sum basis. This means you approach the post office, hand over a one-time amount, and get your NSC processed.

However, since there is no limit to how many NSCs you can invest in, several investors deposit a small amount every month and collect an NSC certificate in return. This helps them operate an NSC like a recurring deposit, except with a higher National Savings Certificate interest rate.

Taxation Benefits on NSC

The NSC interest is taxable unless you file an exemption against it.

You can claim a tax rebate of up to Rs. 1.5 lakhs on your NSC’s interest rate and principal amount. This rebate can be claimed under Section 80C of the Income Tax Act (ITA) when filing your returns.

However, your entire NSC interest is taxable if you’ve already claimed a tax rebate of up to Rs. 1.5 lakhs on other tax savings instruments listed under Section 80C of the ITA.

Documents required to start an NSC

Listed below are the documents required to start an NSC:

  • The NSC application form
  • Identity proof (voter ID card, driving license, PAN card, or Aadhaar card)
  • Address proof (utility bills, passport, or bank statement)  
  • Photograph of the investor or investors in case of joint application.

Documents Required for Premature Withdrawal of NSC

You require the following paperwork to prematurely collect the principal and NSC interest.

  • Original NSC document
  • NSC encashment form
  • Identity proof (Aadhaar card, PAN card, or Voter ID card)
  • Guardian attestation in case of a minor
  • If the original NSC holder passes away, the nominee or legal heir must submit Annexures 1 and 2 forms along with all the other documents listed above. 

Documents Required to Encash an NSC After Maturity

You require the following paperwork to collect the principal and NSC interest after maturity:

  • NSC encashment form
  • 1 identity proof (Aadhaar Card, PAN card, Voter ID card, etc.)
  • Original National Savings Certificate

Parting Thoughts

Want to invest in an NSC? If so, then consult the latest NSC interest rate chart, visit your nearest post office, and file an application. 

If you wish to reinvest your proceeds earned through the NSC interest, partner with Tata Capital Moneyfy. Reinvest these earnings into lucrative financial instruments like mutual funds, FDs, NPS, and others.

0 CommentsClose Comments

Leave a comment

To know more about Terms & Conditions, click here.


This communication is provided for general information only, without regard to any specific objectives, financial situations and needs of any particular person. This communication does not constitute an offer or invitation to avail services and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Nothing in this communication should be considered as an investment or financial advice, nor should this communication be construed as an advice to buy or sell or as a solicitation to buy or sell the securities if any referred to herein. The intent of this communication is not recommendatory in nature. This communication is being supplied to you solely for your information and the same should not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published or copied, in whole or in part, for any purpose whatsoever.