National Savings Certificate (NSC) is a safe government investment. It offers fixed interest and tax saving under Section 80C. Learn NSC benefits, lock-in period, and returns in easy words.
Introduction
Saving money is important for everyone. A good saving plan helps you reach future goals like education, marriage, or retirement. Many people want an investment option that is safe, simple, and gives fixed returns. One such option is the National Savings Certificate (NSC).
The National Savings Certificate (NSC) is a government-backed saving scheme in India. It is mainly designed for small and middle-income investors who want safe and guaranteed returns. This scheme is very popular because it also offers tax benefits under Section 80C of the Income Tax Act.
In this article, you will learn what National Savings Certificate (NSC) is, how it works, its interest rate, benefits, tax advantages, and who should invest in it. This guide is written in simple English so that anyone can understand it easily.
Also read: Post Office Monthly Income Scheme 2026: Interest Rate, Benefits & Returns.
What is National Savings Certificate(NSC)?
The National Savings Certificate (NSC) is a fixed-income investment scheme offered by the Government of India. It is available through post offices across the country. When you invest in NSC, your money is locked in for a fixed period, and you get guaranteed returns at maturity.
This scheme is considered very safe because it is backed by the Indian government. That means there is almost no risk of losing your money. Because of this, National Savings Certificate (NSC) is suitable for conservative and low-risk investors.
Key Features:
1. Government-Backed Safety
National Savings Certificate (NSC) is supported by the Government of India. Your investment is fully secure, and returns are guaranteed.
2. Fixed Interest Rate
The interest rate of NSC is fixed by the government and revised from time to time. Once you invest, the interest rate remains the same till maturity.
3. Lock-In Period
NSC has a fixed lock-in period of 5 years. You cannot withdraw money before maturity except in special cases.
4. Minimum Investment
You can start investing in National Savings Certificate (NSC) with a small amount. This makes it affordable for most people.
5. Compounded Returns
Interest in NSC is compounded yearly. This helps your money grow better over time.
For long-term retirement planning, many investors also compare NPS vs PPF: Which Is Better Investment for Retirement in India? before making a decision.
National Savings Certificate (NSC) Maximum Limit
- There is no fixed maximum limit on how much you can invest in the National Savings Certificate (NSC). You can invest any amount as long as you want, in multiples of ₹100.
- However, for tax benefits under Section 80C, you can only claim deduction on up to ₹1.5 lakh per financial year
How does it Work?
When you invest in National Savings Certificate (NSC), you buy a certificate from the post office. You invest a lump sum amount, and the money grows with fixed interest.
Learn about National Savings Certificate (NSC) on the official Government website
The interest earned every year is added back to the principal amount. This means you earn interest on interest as well. At the end of 5 years, you get the full maturity amount.
You do not receive interest every year. Instead, you receive the total amount at maturity.
National Savings Certificate (NSC) Interest Rate
The interest rate of National Savings Certificate (NSC) is decided by the government and may change from time to time. However, once you invest, the rate remains fixed for the full term.
The interest is compounded annually, but paid only at maturity. This makes NSC a good option for long-term savings with stable growth.
National Savings Certificate (NSC) Eligibility
Who Can Invest in NSC?
- Resident Indian Individuals
Only Indian residents can invest in the National Savings Certificate (NSC). - No Age Limit
There is no minimum or maximum age limit.- Adults can invest directly
- A minor (child) can invest through a parent or legal guardian
- Single or Joint Account
NSC can be opened:- In single name, or
- As a joint account (up to 3 adults)
- Guardian for Minors
A parent or guardian can open NSC on behalf of a minor.
Read about 7 Best Short‑Term Investment Plans with High Returns in India 2026 – covers top short‑term options like FDs, RDs, liquid funds.
Tax Benefits of National Savings Certificate (NSC)
1. Section 80C Deduction
Investment in National Savings Certificate (NSC) qualifies for tax deduction under Section 80C of the Income Tax Act. You can claim up to ₹1.5 lakh in a financial year.
2. Interest Tax Benefit
The interest earned in the first four years is considered reinvested and also qualifies for Section 80C benefit.
3. Tax on Maturity
The maturity amount of NSC is taxable. The interest earned is added to your income and taxed as per your income tax slab.
Who Should Invest?
National Savings Certificate (NSC) is suitable for:
NSC Features – Official India Post Document
- Salaried individuals looking for tax saving
- People who want safe and guaranteed returns
- First-time investors
- Risk-averse investors
- Parents saving for children’s future
- People who do not want market risk
If you want stable returns without worrying about market ups and downs, NSC can be a good choice.
Advantages of National Savings Certificate (NSC)
1. Very Safe Investment
Since it is government-backed, National Savings Certificate (NSC) is one of the safest investment options in India.
2. Fixed and Guaranteed Returns
You know exactly how much money you will get at maturity.
3. Tax Saving Option
NSC helps you save tax under Section 80C.
4. Easy to Invest
You can invest in NSC at any post office with simple documents.
5. Loan Facility
You can use National Savings Certificate (NSC) as collateral to take loans from banks.
Disadvantages of National Savings Certificate (NSC)
1. Lock-In Period
Your money is locked for 5 years, which reduces liquidity.
2. Interest Is Taxable
The interest earned is taxable at maturity.
3. No Regular Income
NSC does not provide monthly or yearly interest payments.
4. Not Inflation-Beating
Returns may not always beat inflation in the long term.
National Savings Certificate (NSC) vs Fixed Deposit
| Feature | NSC | Fixed Deposit |
|---|---|---|
| Safety | Very High | High |
| Returns | Fixed | Fixed or Variable |
| Tax Benefit | Yes (80C) | Only in Tax Saver FD |
| Lock-in | 5 Years | Flexible |
| Risk | Very Low | Low |
National Savings Certificate (NSC) is better for tax saving, while FD offers more flexibility.
If you are unsure where to invest your savings, read our guide on RD vs FD: Which Is Better in 2026? Returns, Interest Rates & Best Choice.
How to Invest in National Savings Certificate (NSC)?
Step 1: Visit Post Office
Go to your nearest post office that offers NSC.
Step 2: Fill Application Form
Fill the NSC application form with basic details.
Step 3: Submit Documents
Provide identity proof, address proof, and photographs.
Step 4: Make Payment
Pay the investment amount by cash, cheque, or demand draft.
Step 5: Get Certificate
You will receive the National Savings Certificate (NSC) in physical or digital form.
Is National Savings Certificate (NSC) Safe?
Yes, National Savings Certificate (NSC) is one of the safest investment options in India. Since it is backed by the Government of India, there is no market risk involved.
If your main goal is capital safety, NSC is a reliable choice.
National Savings Certificate (NSC) vs PPF
| Feature | NSC | PPF |
|---|---|---|
| Safety | Very safe – backed by government | Very safe – backed by government |
| Investment Period | 5 years | 15 years (can extend in blocks of 5 years) |
| Tax Benefit | Yes – Section 80C, up to ₹1.5 lakh | Yes – Section 80C, up to ₹1.5 lakh |
| Interest | Fixed, compounded yearly, taxable | Fixed, compounded yearly, tax-free |
| Flexibility | Cannot withdraw before 5 years | Partial withdrawals allowed after 5 years |
| Best For | Short-term safe investment + tax saving | Long-term wealth creation + tax-free returns |
Conclusion
The National Savings Certificate (NSC) is a simple, safe, and trusted investment option for people who want guaranteed returns and tax benefits. It is ideal for conservative investors who do not want to take risks in the stock market.
With a fixed interest rate, government backing, and Section 80C tax benefits, National Savings Certificate (NSC) remains a popular long-term saving scheme in India. However, due to its lock-in period and taxable interest, it should be part of a balanced investment plan.
Before investing, always match NSC with your financial goals and time horizon.
How to Save Money From Salary: 10 Practical Ways That Work – practical tips on tracking expenses, automating savings, cutting costs, and building good salary‑saving habits.
Frequently Asked Question(FAQs)
Q1. What is National Savings Certificate (NSC)?
National Savings Certificate (NSC) is a government-backed saving scheme that offers fixed returns and tax benefits.
Q2. Is NSC risk-free?
Yes, NSC is considered very safe because it is backed by the Government of India.
Q3. What is the lock-in period of NSC?
The lock-in period of National Savings Certificate (NSC) is 5 years.
Q4. Is interest earned on NSC taxable?
Yes, the interest earned is taxable as per your income tax slab.
Q5. Can I claim tax benefit on NSC?
Yes, investment in National Savings Certificate (NSC) qualifies for tax deduction under Section 80C.
Q6. Can I withdraw NSC before maturity?
Premature withdrawal is allowed only in special cases like death of the holder.
Q7. How much will I get in NSC after 5 years?
After 5 years, the amount you get from National Savings Certificate (NSC) depends on the interest rate at the time of investment. For example, if you invest ₹1,00,000 in NSC at an interest rate of 7.7% per year, you will get around ₹1,44,900 after 5 years.
Q8. Is NSC better than FD?
Both NSC and Fixed Deposit (FD) are safe, but they serve different goals:
NSC gives tax benefits under Section 80C and long-term guaranteed returns.
FD may offer flexible terms (shorter or longer), and some FDs also offer tax-saving options.