National Savings Certificate, NSC in short, is a secured investment scheme offered by the Government of India. Primarily a savings bond, NSC is provided to individuals through different post offices. The scheme mainly aims to provide easy savings options to average and low-income earners.
NSC Interest Rates 2022
NSC interest rates vary depending on their NSC’s maturity. These schemes introduced by the Government of India are available with two tenors variants for maturity. The rate of interest provided as per the maturity periods are listed below along with their tenure and issue numbers:
||Rate of Interest
Interest Applicability on Premature Withdrawal of NSC
The different interests on NSC applications are mentioned in the table below.
|Time of Withdrawal
|Withdrawal before the completion of 1 year
|Withdrawal after the completion of 1 year
||Interest offered at the rate applicable then.
Further, the specific scenarios under which investments in NSC can be withdrawn are listed below. During premature withdrawal, the return is calculated as per the National Saving Certificate interest rate though the tenor duration is shorter.
- The demise of the owner.
- If the certificate is forfeited.
- In case a court of law orders the withdrawal of the invested amount.
Every applicant needs to note that while the NSC interest rate remains unchanged, the premature withdrawal of NSC requires specific documents which are mentioned below.
- Original NSC documents.
- Filled in NSC encashment form.
- Identity proof similar to application requirements.
- For minors, attestation of the guardian must also be presented.
- For nominees applying for withdrawal, Annexure 1 and 2 forms must also be submitted.
Usually, the post office releases the corpus via cheque.
Application Procedure for NSC
The application procedure for NSC is quite simple. Interested applicants can simply apply for the certificate at their nearest post office along with the documents mentioned above. They can make the payment either by cash or cheque.
Eligibility Criteria and Document Requirements for NSC
While eligibility criteria for NSC simply require an investor to be a resident Indian without any age limit, the necessary documents to save in NSC must be noted. Also, the scheme does not outline age requirements as eligibility, thus allowing individuals from all age groups to benefit from the plan. Along with checking the NSC interest rate chart, investors should also check the documents listed below since their submission is vital to buy a National Savings Certificate.
- Fully filled-in NSC application form.
- Any Government-issued identification proof like a voter ID card, Aadhaar card, passport, driving license, etc.
- Address proof of the applicant like electricity bill, landline bill, etc.
- Passport-sized photograph of the applicant.
Benefits of NSC
While the NSC interest rate 2021 is quite lucrative, it is also essential for potential investors to note all features and benefits offered under this scheme. These are discussed below in detail.
- Fixed return: Return on any investment in NSC is fixed since the rates of interest offered on them are not subject to market fluctuations. However, it is essential to note that the government has the right to revise this rate every 6 months.
- Tenure choice: The two different issues by the Government of India offer two different rates of interest to choose from. Investors can opt to go for a tenure of 5 or 10 years, with the NSC rate being decided by their choice of tenure.
- Choice of investment amount: The minimum investment amount for NSC stands at Rs.100. This makes it a popular choice of investment for low-income earners. Furthermore, individuals can choose to invest in multiples of Rs.100. There is no upper limit to investment in NSC, thereby allowing individuals to invest as per their income, savings and long-term financial goals.
- Tax benefits: Quite a few tax benefits are offered on investments made in NSC. This includes both the principal invested as well as the interest earned as per the NSC rates. Investments in NSC qualify for different deductions under section 80C of the Income Tax Act and other sections, which are discussed later.
- Easy access: Investment via post offices across India has made NSC readily available to the Indian population and ultimately led to its popularity.
- Loan options: While the high NSC interest rate makes it an attractive investment option, a significant feature that makes it even more lucrative is the availability of loans against these investments. NSC certificates can be provided as collateral at different financial institutions to avail secured loans. One can thus, conveniently fulfil various financial requirements by availing such loans. Also, as secured loans carry a lower risk for lenders, interest rates offered on them are convenient, which makes repayment affordable too.
- Easy nomination: Along with attractive NSC interest rates, the investment plan also allows an investor to nominate another to receive benefits in case of his/her demise. The nominee can thus receive the entire corpus after scheme maturity.
- Easy transfer: This policy can be easily transferred from one post office to another in case an investor is relocating. It does not impact the interest since returns are generated at the NSC current interest rate decided by the Government of India. Additionally, this scheme also allows investors to transfer ownership, although this facility can be availed only once.
Q1. What is the interest rate of the National Savings Scheme?
The NSC rate of interest is 6.8% p.a.
Q2. Is the NSC interest higher than PPF interest rate?
No. The PPF interest rate is 7.1%, whereas, NSC is 6.8%.
Q3. If I withdraw my investment before completing one year, is the interest added?
No. There will be no interest earned on it before completing a year.
Q4. How is the NSC interest rate compounded?
The NSC interest rate is compounded semi-annually.
Q5. Is the interest rate applicable with premature withdrawal after a year?
The interest is computed for every year that you have been invested.