Article explains What is National Savings Certificate, Limit for Investment in NSC, Tax treatment of NSC Investment and Interest on NSC, What you must ensure in respect of NSC while filing Income Tax Return, Why Non-Resident Cannot Invest in NSC, Denominations in which NSC certificates shall be issued, Where to Purchase NSC , Main Features of  NSC VIII Issue, Main Features of  NSC IX Issue.

What is National Savings Certificate?

National Savings Certificate (NSC) is an Investment alternative developed by Government of India with an intention to induce persons to a saving habit and to develop National Savings. National Savings Certificate is issued through Post Offices; they are the nodal agency which makes it available to the common public.

National Saving Certificates in India is ranked as ‘highly secured’ in the class of Investments. It is an Investment’ which has Tax Advantage while (i) Investing, (ii) during the life and (iii) at the time of maturity of the Investment.

Limit for Investment in NSC

A minimum of one thousand rupees and any sum in multiples of one hundred rupees may be deposited in an account. There shall be no maximum limit for deposit in an account or in accounts held by an account holder.

Tax treatment of NSC Investment and Interest on NSC

Deposits up to Rs. 1.50 lakh in NSC qualify for Deduction Section 80C of the Income Tax Act. Accrued interest on NSC also qualifies for deduction u/s. 80C.

NSC interest is taxable. However, as it is a cumulative scheme (e.g. interest is not paid to the investor but instead accumulates in the account), each year’s interest is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Sec 80C, thereby making it tax-free. Only the final year’s interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the earlier years and the capital amount.

What you must ensure in respect of NSC while filing Income Tax Return

To benefit from this feature of reinvested interest and its deduction, it is important to declare the accrued interest on NSC on a yearly basis in your tax return under the head Income from Other Sources”. Under deductions, you will claim accrued interest for all the years except the last year under Sec 80C as reinvested NSC interest. Both cancel each other out, making the interest in effect tax-free.

Non-Resident Cannot Invest in NSC

Non-Resident Indians are not eligible to purchase the National Savings Certificates.

Denominations in which NSC certificates shall be issued

The National Savings Certificates (IX Issue) shall be issued in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000.

Can NSC be Purchased Jointly and on behalf of minor

Types of Certificates and Issue thereof,—

(1)  The certificates shall be of the following types, namely:—

(a)  Single Holder Type certificates;

(b)  Joint ‘A’ Type Certificates; and

(c)  Joint ‘B’ Type Certificates;

(2)  Detailed description of types are as under:

(a)  A Single Holder Type certificate may be issued to an adult for himself or on behalf of a minor or a person of unsound mind of whom he is the guardian; or by a minor who has attained the age of ten years;

(b)  A Joint A Type certificate may be issued jointly to three adults payable to both the holders jointly or to the survivor,

(c)  A Joint ‘B’ Type certificate may be issued jointly to three adults payable to either of the holders or to the survivor;

Where to Purchase NSC

National Savings Certificates (NSC) are certificates issued by Department of the post, Government of India and are available at most post offices in the country. This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.

Main Features of  NSC VIII Issue

  • Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
  • No maximum limit for investment.
  • No Tax deduction at source.
  • Certificates can be kept as collateral security to get the loan from banks.
  • Investment up to INR 1,50,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
  • Trust and HUF cannot invest.

Main Features of  NSC IX Issue

  • No maximum limit for investment. Minimum Investment Rs. 100
  • Available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
  • A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.

Buy National Savings Certificates (NSCs) every month – Re-invest on maturity and relax – On retirement, it will fetch you monthly pension as the NSC matures.

(Republished with Amendments)

Source- Indian Post

More Under Income Tax


  1. RAMESH says:

    I had invested in NSC INR 1,70,000 in the year 2014 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 4 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC under my income “Interest on NSC”. Then kindly suggest me , how can I do that.erest on NSC”.

    1. Arup Kumar Das says:

      I purchased NSC certificate 5 years ago.Now this year January 2020 it will mature and the interest amount will approx 50000/-.
      So please be advised whether interest amount of NSC comes under taxable income or not.

  2. ramesh says:

    I had invested in NSC INR 1,70,000 in the year 2014 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 4 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC under my income. Then kindly suggest me , how can I do that and what amount i must show “Interest on NSC” in this yr 2018-19


    I want to purchase NSC for my child who is 17 years old. During maturity he will be 22 yrs. Will the interest earned be added to my income or my child’s income.

  4. Sunny says:

    Hi, i have brought NSC (VIII Issue) in June 2016, i brought 10 bonds each cost Rs.10,000. what is the total maturity of bonds after 05 years on 1 lakh and what is the exact interest at that time of June 2016?

  5. Rudra Prasan Behera says:

    I had invested in NSC INR 1,70,000 in the year 2013 & got the matured amount of INR 258014 this year.So the interest amount is INR 88,000. Now since the last 5 years, I have not shown under 80C “Interest on NSC”. But presently, I want to show my interest on NSC(INR 88000) under my income. Then kindly suggest me , how can I do that.


    I got a Policy of amount sum assured 5 lakh for the term of 10 years ,risk covering from 3Feb 2012 .Its installment premium amount was Rs 25,000 annually i.e.,i paid RS 25,000 x 4 =1,00,000. This policy was continued from 2012 -2016 i.e ., 4 years ,but due to some financial problems policy was lapsed ,terminated and refunded behalf of my policy as on FEB 2017,the refunded amount was Rs 1,01,600 in my savings bank joint account, mode of operation either or survivor.Due to mistake i/we didn\\\\'t mentioned this amount in assessment year 2017-2018,can i mention the afore discussed amount is assessment year 2018-2019. In case if i have to pay the TAX,which amount is TAX payable 1,01,600 or 1,600 ???? Please sort out my QUERY ! ! ! **WITH LOTS OF REGARDS**

  7. Ravish Shah says:

    Can I be eligible for a tax deduction if my father is invested in NSC on my name?If the amount was debited from the name of mine.. then am I eligible?

  8. Sunny says:

    If some one has already invested the complete 1.5lac U/S 80c for NSC, then in that case can we declare NSC interest U/S 80C and get benefit of the same.
    Or it will be taxable as the limit of 1.5 lac U/S 80c is fully utilised ?

    1. K.Srinivasa Murthy says:

      I too got the same doubt . I purchased NSC s for Rs 1.50 lakhs.and deducted the amount from my total income under 80 c . The interest earned is not taxable (except for the last year ) as it is treated as reinvested .But we have to show it as income and claim deduction .Is it allowed as the maximum limit
      of Rs 1.50 lakhs under 80c is already utilised in the same year?

        1. D L Memdhe says:

          Rs. 100000 nsc had maturity interest Rs.51620 ,The 5yrs.interest was 10179.The TDS wii be dedacted on Rs 51620 OR 10179 PL.advice me.

      1. Shailesh says:

        One has to calculate interest for each year, which increases every year due to reinvestment of interest. You may get interest table for each year. This interest is to be added into your income and then claim under 80C upto Rs.1.5 lakh, as on today.

  9. PAWAN KUMAR says:

    I invested in NSC in 2015, of 5 year duration. will i get the benefit under section 80C till maturity also want to know that after maturity i can show the total amount (earned Interest) in head income from other sources instead of every year.

    pls reply asap.

    1. Kanhaiya Chaudhary says:

      1st year you can take the deduction of invested amount in NSC and rest four you can take the deduction of interest part only and last year you will not get the deduction of interest also

      in short you can take the benefit of nsc interest only for 4 year

      1. Leelanand Kumar says:

        it is a re- invested process.. so my initial investment and along with interest earned at the 2nd year also eligible for tax benefit?

  10. uma says:

    hi, can u explain this text in detail ( with example, if possible) “Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax – On retirement, it will fetch you monthly pension as the NSC matures.”

    1. sreenivasulu says:

      suppose first year you invested some 1,00,000/-
      Assume interest rate is 9.5%
      then at the end of first year total is 1,09,500/-
      so, 2nd year your investment is 1,09,500/-

  11. says:

    Thanks for the information. It shall be better if you could give us the table for interest to be taken for exemption and investment under sec. 80C.

  12. Atul Sarda says:


  13. Vikas says:

    Suppose i earned 8000 interest on NSC in this year and shown it as income from other sources. Upto 10 thousand interest income is free then this 8000 can be taken as free income?

  14. Gaurav Bhardwaj says:

    My name is Gaurav Bhardwaj and I am from Delhi.

    I bought 8 NSC certificates for a total of Rs 40000 in January 2010. These were 8th issue of the NSCs as per the certificates that I have got. Additionally it states that the total amount of 10,075 will be paid per certificate after maturity i.e. after 6 years.
    Today when I went to the Post Office that I am eligible to get only Rs 64 thousand something where as, as per the certificate, ideally I should be getting Rs 80,600.

    Can you please advise how that can be possible without intimating it to the investor.

    Looking forward to your reply.

    With regards
    Gaurav Bhardwaj

  15. anu says:


    I had got 2 NSC’s of 10K value in 2012 FEB but was not aware that we need to put it against tax returns from next year onwards, Kindly let me know what can be done now?
    Should I put it in tax returns from 2015 ?

  16. lakshay says:

    is there any rule change for post office that post office will not pay your money from nsc or kvp by cheque or cash post office is saying that you should open saving ac in post office after that post office transfer payment in your ac then you withdraw this

  17. Kistu siqueira says:

    i am an NRI working in gulf. You said NRI cannot invest in NSC but can i invest in my wife and children name.

    If yes, how much i can invest per annum to get good returns and also avoid paying tax

  18. ravi says:

    I had purchased NSC of value 15000 on 12OCT2013 and while filling returns this year i want to declare intrest, please help to calulate intrest earned for each year, 2014, 2015, 2016, 2017 and 2018

  19. Sumitava Chowdhury says:

    I want to purchase NSC, but one thing which I want to get it cleared first is if I fail to encash my certificate on maturity date, then will the rate of interest drop to that of a SB account rate of interest on the very next day?

  20. kamal singh says:

    I have purchasing 10,000 nsc certificate on date 01/04/2011 & getting rs 6010 after maturity date 01/04/2017. I want to know incom tax on intrest rs 6010 will be applicable or not.if applicable how calculate?

  21. george says:

    saving bank interest up to Rs.10,000/- is exempted. can the interest on nsc after maturity be considered as under this head to claim exemption.

  22. Nishit says:


    I have recently purchased Rs1,00,000 worth of NSC VIII Certificates and I will deduct the same amount under Section 80C for my IT Returns. I wanted to know, can I use these same certificates, for which I have claimed tax deduction, as collateral to get Personal Loan?

  23. Sanjay says:

    Hi Saritha, Please be informed that interest in NSC are taxable it can be claimed as tax free if you will declare it under income from other sources and simultaneously you claim the same amount under section 80-C but on the year of maturity the final interest will be taxable because it will not be reinvested rather paid to you. How ever when Maturity proceeds from NSC certificate is concerned it is tax free.

  24. rishi jaiswal says:

    I am 33 years old doing a job in a privately owned IT company. Will you please advise how can I be eligible to get a pension on my retirement supposing to be in late 50s?

  25. Subhendu Sekhar Hari says:


    I am now 60+, like to continue prolong job for further 6 Years, and say 2020 I like to get back all my NSC Money what ever I will be depositing, how to proceed,guide line requested.


    Subhendu Sekhar Hari

  26. Jeyaram G says:

    Thanks for the useful article.
    Article says interest accured can be considered tax exempted for first 5 years. Is it applicable for 10 year NSC also ? meaning, for the first 5 years of NSC , accrued income need not be considered for tax purpose. If so, in the 6 th year of 10 year NSC, does the total interest accured from 1st to 6th year have to be considered for tax? Request clarificationpl.

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