NSC (National Savings Certificate) - Interest Rate 2025-26 & Tax Saving Benefits

The National Savings Certificate (NSC) is a secure investment option provided through post offices. Interest rate fixed for Q2 of FY 2025-26 is 7.7% per annum. A minimum investment is Rs. 1,000 is required to open an NSC account and lock in period is for 5 years. Tax benefits of up to Rs. 1.5 lakh is available under section Section 80C of the Income Tax Act.

NSC Interest Rate for Q2

The National Savings Certificate (NSC) will have an interest rate of 7.7% for Q2 (July- September) of Financial Year 2025-26. 

What is National Savings Certificate?

• The National Savings Certificate (NSC) is a fixed-income investment scheme that can be opened with any post office branch.
• This is an initiative by the Government of India mainly for small to mid-income investors.
• Tax deductions are available for investments made in NSC during the financial year under the old regime u/s 80C
• It is a low-risk investment option - which practically gives return with zero risks.

NSC Scheme Key Highlights

You can invest in NSC from the nearest post office in your name, for a minor or with another adult as a joint account. NSC comes with a fixed maturity period of five years. There is no maximum limit on the purchase of NSCs. 

Benefits and Features of NSC

NSC Interest Rate

The rate of interest is 7.7% p.a. for Q2 FY 2025-26, which the government revises every quarter. 
It gets compounded annually but will be payable at maturity.

NSC Interest Rate History

NSC Interest Rates are periodically reviewed by the Ministry of Finance, leading to revisions every quarter. Interest on NSC is compounded annually and disbursed upon maturity. Below is a chart depicting the historical NSC interest rates from previous years

NSC Interest Calculator

NSC Calculator - Calculate National Savings Certificate Interest Online

Who should Invest in National Savings Certificate (NSC)?

• Investor who wants to invest funds for a long-term
• Risk averse investors and those are new to investments.
• Who wants to claim deductions along with competitive rate of interest.
• Salaried individuals who have not exhausted 80C investment limit - can invest in NSC, declare the investments to the employer, thereby reduce their taxable income and resultant TDS.

NSC - Eligibility Criteria

National Savings Certificate is one of the schemes covered under Government Savings Promotion General Rules, 2018. Therefore, the eligibility criteria for NSC is similar to other post office savings scheme. The are listed below: 

• The person should be an Indian resident and citizen to open an account under NSC. Non-resident Indians (NRI) cannot purchase NSC certificates.
• A guardian or parent can open NSC account on behalf of a minor person or a person of unsound mind, provided both are residents.
• This scheme is only for individuals,  Hindu Undivided Families (HUFs) and trusts cannot invest in it. 
• If the minor has crossed 10 years, he can open his own NSC account.
• Joint account can be opened, which can have up to 3 joint account holders.

Withdrawal Rules

• Generally, one cannot exit the scheme early. 
• However, they accept it in exceptional cases like the death of an investor or if there is a court order for it.

Premature Withdrawal

The interest available on premature is withdrawal is restricted based on the time of withdrawal. The amount of interest receivable is presented below:

Comparing NSC with Other Tax-saving Investments

NSC is one of the tax-saving investment options available under Section 80C of the Income Tax Act, 1961. The other popular options are Equity Linked Savings Schemes (ELSS), National Pension System (NPS), Public Provident Fund (PPF) and Tax-Saving Fixed Deposits (FD). The table below compares NSC with other tax-saving investments:   

How to Invest in NSC?

• Currently, certificates can be bought either by electronic mode (e-mode) or Passbook mode.
• While the passbook method is unpopular and comparatively more tedious, you can effortlessly buy an NSC scheme with a savings account at an authorized bank or post office. 
• It is important to note, however, that you would require to activate your internet banking to do the same.

How to Invest in NSC Offline?

To invest in NSC offline, follow the listed steps:  

Step 1: Collect the NSC application form online or at any post office. 

Step 2: Fill out the form with all the details. 

Step 3: Submit the form with self-attested copies of the required KYC documents.  

Step 4: Take the original documents for verification and pay the amount you want to invest.

Step 5: Upon approval, collect the NSC of your application.  

How to Apply for NSC Online?

Step 1: Open Department of Posts (DOP) net banking and log in. 

Step 2: Under 'General Services', select 'Service Requests'. 

Step 3: Click on 'New Requests' and choose ‘NSC Account – Open an NSC Account (For NSC)’. 

Step 4: Enter the deposit amount and choose the debit account linked to the PO savings account. 

Step 5: Choose ‘Click Here’ to run through the terms and conditions. Accept them once done. 

Step 6: Enter the transaction password and click on ‘Submit’. 

Step 7: The deposit receipt will be there to view and download. 

Step 8: Login and click on 'Accounts' to view the details of your NSC account.

Documents Required to Apply for NSC

Investors are required to submit:

• Identity proof, such as a passport, permanent account number (PAN) card, driver's license, senior citizen ID, or any other official government identification
• Photograph.
• Address proof, like electricity bill, passport, phone bill, or bank statement.

How to Request for a Duplicate National Savings Certificate?

You can seek a duplicate if your original NSC certificate is lost, stolen, destroyed, damaged, or mutilated.

Simply complete and return the Duplicate Savings Certificates form to the post office that issued the NSC that needs to be replaced.

The following are the form's key fields:

1. Serial numbers, denominations, NSC issue, and other information regarding the certificate(s).
2. The purchase date of the certificates.
3. The objective for filing for a duplicate certificate, together with additional details, must be indicated. 

How To Redeem NSC After Maturity?

Upon maturity, the NSC can be encashed at any Post Office branch and not necessarily at the branch where the account is held. 

If you want to withdraw the money from a branch that is not your account’s home branch, you will have to submit an application with details, such as serial number, issue date, full name, registered and current address. 

When you want to encash the maturity amount, you have to carry the following documents with you:

• Original NSC certificate 
• Identity proof
• NSC encashment form
• The person entitled to receive the encashment must sign behind the certificate after receiving the payment

Final Word

Making investments depends on the risk appetite of the investor. One should consider all the risks and rewards associated with the investment and know enough information about the scheme. This article will provide you the relevant information about National Savings Certificate (NSC) scheme and everything one must be aware about.