National Savings Certificate (NSC VIII Issue)

What is the National Savings Certificate?

National Savings Certificate (VIII Issue), or NSC, is a fixed-income small savings scheme of the Government of India, offered through the Department of Posts under the Ministry of Finance. NSC is a five-year, government-backed savings certificate sold at post offices that combines a guaranteed return with a Section 80C tax deduction.

According to India Post, NSC currently pays 7.7% a year (July-September 2026), compounded annually and paid out in full at maturity after 5 years. The Ministry of Finance has held the NSC rate at 7.7% since 1 April 2025, leaving it unchanged across every quarterly review up to and including the July-September 2026 quarter. Because the certificate is backed by the Government of India, both the capital and the interest are treated as effectively risk-free, which makes NSC popular with conservative savers looking for a tax-saving instrument with a guaranteed return.

Key objectives

• Encourage small and medium savings among individuals.
• Offer a safe, government-guaranteed fixed return.
• Provide a tax-saving option under Section 80C.

Main features

• 5-year maturity with interest compounded annually.
• Minimum Rs 1,000, in multiples of Rs 100, with no maximum limit.
• Section 80C deduction up to Rs 1.5 lakh a year.
• Can be pledged as loan collateral and transferred in limited cases.

Who is eligible for National Savings Certificate?

You can invest if:

• You are a resident individual Indian adult, investing singly or jointly.
• You are a guardian investing on behalf of a minor, or a minor aged 10 or above in their own name.

You cannot apply if:

• You are a Hindu Undivided Family (HUF); HUFs cannot invest in NSC VIII Issue.
• You are a trust, trusts are not eligible.
• You are a non-resident Indian (NRI): NRIs are not eligible to buy fresh NSC.

Companies and other institutions are also outside NSC, which is designed for individual small savers.

What documents are required for National Savings Certificate?

How to apply for National Savings Certificate

1. Visit any India Post office that offers small savings schemes, or log in to India Post internet banking if you have a Post Office Savings Account.
2. Ask for the NSC (VIII Issue) application form and fill in your details.
3. Complete KYC by submitting identity and address proof and your PAN card.
4. Deposit at least Rs 1,000 (in multiples of Rs 100) by cash, cheque or online transfer.
5. Choose single, joint or minor holding and nominate a beneficiary.
6. Collect the certificate or passbook confirming your NSC investment and its maturity date.

Existing Post Office Savings Account holders with internet or mobile banking can open an NSC fully online through the India Post portal.

How much benefit does National Savings Certificate provide?

NSC pays 7.7% annual interest (July-September 2026), compounded yearly and paid at maturity after 5 years. Because the interest is reinvested every year rather than paid out, the effective return builds up over the term. According to India Post's own worked example, a deposit of Rs 1,000 grows to about Rs 1,449 at the end of 5 years at the current 7.7% rate — so every Rs 100 invested returns roughly Rs 144.90 on maturity. The rate is locked in for the whole 5-year term at the level notified for the quarter in which the certificate is bought, so a later rate cut does not affect a certificate already issued.

The main benefits are:

• Guaranteed, government-backed return at 7.7% for the current quarter, fixed for the full 5-year tenure of the certificate.
• Section 80C deduction on the invested amount, up to Rs 1.5 lakh a year.
• The accrued interest for years one to four is treated as reinvested and also qualifies for a fresh Section 80C deduction, which lowers the effective tax burden during the holding period.
• The certificate can be pledged as collateral for a loan from a bank or approved lender.

The small-savings interest rate is reviewed every quarter by the Ministry of Finance, so the rate applying to a new certificate is the one notified for that quarter. Existing certificates keep the rate at which they were issued.

How is NSC interest taxed?

NSC interest is taxable each year as deemed income under Income from Other Sources, even though the money is actually paid only at maturity. This creates a useful quirk. For years one to four, the interest that accrues is treated as reinvested into the certificate, so it counts as a fresh NSC "investment" and qualifies for a Section 80C deduction in the year it accrues. Only the fifth and final year's interest is fully taxable without any offsetting deduction, because it is paid out rather than reinvested.

No tax is deducted at source on NSC interest, so the holder must declare the accrued interest in the annual return. Many savers report the interest on the accrual basis each year to spread the tax, though reporting it entirely at maturity is also seen in practice; the accrual method usually works out better because of the Section 80C set-off in years one to four.

Who can hold an NSC and in what form?

NSC (VIII Issue) can be held singly, jointly by up to three adults, or by a guardian on behalf of a minor. A minor who has attained 10 years of age may also hold a certificate in their own name. There is no cap on how many certificates one person can buy, and no ceiling on the total amount invested; only the Section 80C deduction is capped at Rs 1.5 lakh a year.

A certificate can be transferred from one post office to another anywhere in India. Transfer of ownership from one person to another is restricted and is allowed only in specific situations, on the death of the holder (to the nominee or legal heir), under a court order, or on transfer to a specified relative under the rules. Nomination can be made at the time of purchase using Form 1, or added or changed before maturity using Form 2, so that the nominee can claim the maturity amount if the holder dies.

Premature closure and loan against NSC

NSC has a strict 5-year lock-in. Premature closure is allowed only in limited cases, the death of the holder, a court order, or forfeiture by a pledgee who is a government body. If closed within one year, no interest is paid; if closed after one year but before maturity, interest is paid at the Post Office Savings Account rate.

For liquidity without breaking the certificate, NSC can be pledged as security for a loan from banks and approved lenders.

Help and grievance redressal

• India Post toll-free helpline: 1800 266 6868
• Official portal: indiapost.gov.in for scheme details and internet banking
• Your post office branch for certificate, nomination and pledge queries

NSC is issued directly by India Post with no agent fee for opening the certificate. Keep your certificate or passbook and nomination details safe, as they are needed at maturity or for a loan pledge.