National Savings Certificate

National Savings Certificate

by Ankit Jaiswal on Basic Finance, Investing Basics

There are a lot of options available to the investors when it comes to savings. To know about different investment options, you can enroll in the NSE Academy Certified Financial Planning & Wealth Management course on Elearnmarkets.

These savings option comes with a number of attractive features namely tax benefits, attractive interest rates, safety, etc.

These investment products are designed to satisfy various needs of investors which include some of the features mentioned above.

Some of the most common fixed income securities include National Savings Certificate, Public Provident Fund, and Kisan Vikas Patrika.

However, today in this article we’ll talk only about National Savings Scheme (NSC).

The inception of the National Savings Certificates (NSC) dates back to 1950’s when it was issued by the government to collect funds for nation-building.

National Savings Certificate

National Savings Certificate, more commonly known as NSC is a savings bond issued by the Indian government for small savings and for income tax savings in India.

These certificates are issued by post- office, which can be taken from any branch of Indian postal office.

It can be issued for a period of 5 years and 10 years and can also be kept as collateral with the banks for availing loans.

It is launched by the Indian government in order to promote savings habit among the Indian masses and to channelize these funds in the right path for the growth of the country.

The government in order to encourage more investment under this scheme, has allowed to claim as a tax deduction under 80 C.

The interest rate on 5 years NSC is at par with that of other Fixed Income instruments like PPF, which stands at 7.60%.

The interest on NSC is declared by the government each year before 1st April and it is compounded yearly w.e.f. 1st April 2016.

You can calculate returns using NSC Calculator.


How much to invest in NSC?

The minimum investment to be made in NSC is Rs 100 and there’s no maximum limit on the invested amount.

But the maximum tax deduction, you can claim under 80C stands at Rs 1,50,000.

It is issued in various denomination of Rs 100, Rs 500, Rs 1000, Rs 5000, Rs 10,000 and an individual can buy any number of certificates of any denomination.

However,  an  NRI is not allowed to invest in NSC.

Key features

Some of the main features of National Savings Certificate are stated below-

1. No premature evaluation

You cannot withdraw the investments prematurely unless it is the case of death of the holder.

2. Various denominations

The certificate is available in various denominations including Rs 100, Rs 500, Rs 1000, Rs 5000 and Rs 10,000.

3. Minimum denomination

You can start your investment in NSC with a minimum of Rs 100.

4. No maximum limit

There’s no limit on the amount to be invested in NSC

5. Only for individuals

It’ s only meant for individuals and the entities like trusts, HUF, companies cannot invest in it.


An individual can avail the following benefits by investing in NSC-]

1. The certificates can be used as a collateral to avail loan from banks.

2. You can claim deduction up to Rs 1,50,000 under 80C of the income tax act.

3. The certificates can be bought on behalf of the minors.

4. The interest earned on National Savings Certificate gets compounded and is reinvested which implies an increase in the invested amount without buying any extra certificates.

Documents required

The documents needed to purchase National Savings Certificates are stated below-

1. Application form

The form is known as Form 1 and it allows you to declare nominee and the amount to be invested.

2. Identity and address proof

You can show your documents like Aadhar card, Voter ID card, Passport, Driving license etc.

Also ReadKYC – Know more about your client


Premature evaluation

National Savings Certificate comes with a lock-in period and cannot be withdrawn before the maturity date subject to following conditions:

1. On the death of the holder or holders (in case of joint holders)

2. The holder of the certificates forfeits the certificate through a pledge.

3. On order by a court of law to be paid prematurely

However, the conditions stated on the amount which you will get by closing NSC prematurely are stated below-

1. If the certificate is withdrawn within a year of its issue, then you will receive only the invested amount, without any interest.

2. If NSC is withdrawn between 1-3 year, then the interest paid will be only simple interest.

Nomination facility

The subscriber of the National Savings Certificates (NSC) can choose any individual as a nominee at the time of buying the certificate in Form 1 or before NSC matures in Form 2.

In case of the death of the holder, the nominee becomes entitled to receive the investment proceeds.

In case of death of the holder, the nominee shall be entitled to-

1. Encash the certificate

2. Divide the amount in proper denominations in favor of individual nominees.

However, the right of the nominee comes into play only in case of death of the original holder.


National Savings Certificates is a great way to accumulate funds in a long-term time frame.

You have an option to hold it jointly or you can hold it singly and nominate someone, which is not possible in other savings product like PPF.

However, you should conduct your own research and compare it with other savings instrument to take a better decision.

Keep learning!!

Disclaimer wants to remind you that all our content is created solely for the purpose of education. No strategy, stock, commodity, fund or any other security discussed here is any way a recommendation for trading or investing. will not be any way responsible for trading losses incurred by any individual or entity for trading with real money. Please take advise of certified financial advisers before trading or investing.


    • Hello Arindam,
      Thank you for your comment.

      A National Savings Certificate(NSC) can be withdrawn before maturity only under the following conditions:
      1.On the death of the holder or holders(in case of joint holders)of the NSC Certificate.
      2. The holder of the certificate forfeits the certificate through a pledge before a Gazetted Officer.
      3.The court orders the premature payment
      If the NSC Certificate is prematurely withdrawn within one year from its issue: you will receive only the amount invested and no interest.
      If the NSC Certificate is prematurely withdrawn within a period of 1-3 years from it’s issue you will get the amount invested and the simple interest.
      You may read more about another great and safe investment option: Public Provident Fund.
      Happy Reading!

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