{"id":5241,"date":"2024-03-31T14:34:12","date_gmt":"2024-03-31T09:04:12","guid":{"rendered":"https:\/\/incredmoney.wpcomstaging.com\/?p=5241"},"modified":"2025-02-13T07:24:07","modified_gmt":"2025-02-13T07:24:07","slug":"national-savings-certificate","status":"publish","type":"post","link":"https:\/\/devblog.incredmoney.com\/blog\/national-savings-certificate\/","title":{"rendered":"What is the National Saving Certificate (NSC)?"},"content":{"rendered":"

NSC, or National Savings Certificate, is one of the oldest savings schemes launched by the government of India. The scheme aims to encourage small savings and provides fixed returns to its investors. The scheme is open to investment to all resident Indians looking for a safe investment option. In this article, we have explained NSC’s features, benefits, and withdrawal rules in detail.<\/span><\/p>\n

What is the National Savings Certificate (NSC)?<\/strong><\/h2>\n

The National Savings Certificate (NSC) is a fixed-income investment plan launched by the government of India in 1998 to encourage small savings among individuals. The scheme requires you to invest a fixed amount at the start of the tenure. You can invest only once in each NSC certificate. However, there is no limit on the number of NSC certificates you can hold.<\/span><\/p>\n

The interest is generated yearly on your investment, which will automatically be reinvested into your account. At the end of the tenure, you will receive the investment amount and interest in lumpsum.<\/span><\/p>\n

The interest for NSC is 7.7% per annum for the January to March 2024 quarter. The interest is compounded annually and is paid at the time of maturity. Since the interest is reinvested, it can be considered for tax deduction every year.<\/span><\/p>\n

Features and Benefits of National Savings Certificate (NSC)<\/strong><\/h2>\n

The following are the features and benefits of the National Savings Certificate:<\/span><\/p>\n

Deposits<\/strong><\/h3>\n

The minimum deposit for NSC is Rs 1000 and thereafter in multiples of Rs 100, and there is no limit on the maximum annual deposit. Deposits can be made through cash, cheque, demand draft, or online transfer.<\/span><\/p>\n

NSC Interest Rate<\/strong><\/h3>\n

The current interest rate is 7.7% p.a. for the January to March 2024 quarter. The Ministry of Finance revises the interest every quarter. The certificates are issued in denominations of Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000, and Rs. 10,000.\u00a0\u00a0<\/span><\/p>\n

Maturity Period of NSC<\/strong><\/h3>\n

Currently, NSC investments mature in 5 years. Prior to 2015, there were two types of NSC certificates \u2013 NSC VIII Issue (5-year tenure) and NSC IX Issue (10-year tenure). From December 2015, the NSC IX issue was discontinued.<\/span><\/p>\n

Tax Benefits<\/strong><\/h3>\n

Investments in the NSC scheme qualify for deductions under Section 80C, with a maximum limit of Rs. 1.5 lakh. Moreover, the annual interest accrued on the National Savings Certificate (NSC) during the initial four years is considered reinvested, i.e., added to the initial investment. Consequently, this amount is also eligible for a tax deduction within the overall annual limit of Rs. 1.5 lakh. However, the interest earned in the fifth year is not reinvested and is, therefore, taxable based on the investor’s applicable slab rate.<\/span><\/p>\n

It is important to note that this tax exemption is available only if you opt for the old tax regime. No tax deductions are available under the new tax regime (announced in Budget 2023).<\/span><\/p>\n

Premature and Partial Withdrawals<\/strong><\/h3>\n

As per the NSC’s withdrawal rules, premature withdrawal before maturity (within five years) is not allowed. If withdrawn within the first year, no interest will be paid and attracts a penalty.<\/span><\/p>\n

However, no penalty is levied in the following circumstances:<\/span><\/p>\n