This article is an introduction to National Savings Certificates (NSCs), and describes its features.
National Savings Certificate (NSC) is a fixed interest, long term instrument for investment. NSCs are issued by Government of India (the Department of Post). Since they are backed by the Government of India, NSCs are a virtually risk free avenue of investment. They can be bought from authorized post offices.
(Want to know about saving income tax? Please read “Saving Income Tax – Understanding Section 80C Deductions“)
NSCs have a maturity of 6 years. They offer a rate of return of 8% per annum. This interest is calculated every six months, and is merged with the principal. That is, the interest is reinvested, and is paid along with the principal at the time of maturity. For every Rs. 100 invested, you receive Rs. 160.10 at maturity.
NSCs qualify for investment under Section 80C of the Income Tax Act (IT Act). Even the interest earned every year qualifies under Sec 80C. This means that investments in NSCs and the interest earned on it every year, upto Rs. 1 Lakh, are deductible from the income of the investor. There is no tax deducted at source (TDS).
Interest Chart
Following is the interest earned each year on Rs. 1,000 invested in NSC:
| Year | Rate of Interest |
| 1 | Rs. 81.60 |
| 2 | Rs. 88.30 |
| 3 | Rs. 95.50 |
| 4 | Rs. 103.30 |
| 5 | Rs. 111.70 |
| 6 | Rs. 120.80 |
NSCs are issued in the denominations of Rs. 100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000. The minimum investment needed is Rs. 100. There is no upper limit on investment.
Features of NSCs
- Fixed interest, long term, virtually risk free avenue for investment
- Available at authorized post offices
- Maturity: 6 years
- Rate of return: 8% per annum, compounded semi-anually
- Qualifies for investment under Section 80C of the IT Act
- No TDS
- Can be pledged as a security for availing a loan
- Denominations: Rs. 100, Rs.500, Rs.1000, Rs.5,000 and Rs.10,000
- Minimum investment: Rs. 100
- Maximum investment: No upper limit
- Transferable from one person to another
- Encashable prematurely, but with a penalty
- Nomination facility available
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Hi
I purchsed NSC for Rs 65,000 in December 2007. I claimed deductions for the same during the financial year 2007-08.
Now i have couple of questions.
1. What is the amount for which i can claim deductions in tax for the financial year 2008-09. What about the interest earned. Is that taxable?
2. If i wish to transfer NSC worth 30000 to my freind, how will the taxation be, for me and my freind. how will the interest amount calculated in this case.
3. if i transfer the NSC, how will the interest part be adjusted. Will the NSC still remain for the same period or a new NSC with added interest principal be created.
Please explain.
Thanks
Jitendra
Hi Jitendra,
1. As per the chart, the interest per Rs. 1000 invested in the first year is Rs. 81.6. So, since you have invested Rs. 65,000, the interest earned by you would be Rs. 5,304.
This interest would be added to your income of the year, and is fully taxable.
But – and this is interesting – this amount is treated as being “reinvested’ in NSC. This means that you can claim this amount as deduction under section 80C.
2. There should be no tax on the transfer of the NSCs. After the transfer, your friend would earn the interest.
3. The NSCs would retain their original duration and maturity date.
Hello Basant,
Your information is correct. Here is the process.
When the certificate is lost but you have the details (certificate number, date of issue, etc), you need to go to your nearest police station and file an FIR containing the details of your certificates.
Take a copy of the FIR and go to a notary public to get an idemnity bond. I do not have much information about this bond, but the notary would be able to help you with it. The cost of the stamp paper would be in the range of Rs. 100.
Take the FIR copy and the indemnity bond to the post office where the NSC was issued. There, you need to fill up form NC 29.
(You can download form NC 29 here – you need to be logged in)
Submit all the three documents to the post office, and you would be issued a duplicate NSC.
(Please retain photocopies of all these documents for your record)
Hello Raag,
I invested in NSC scheme & it will mature next month. However, I have lost my original certificate & am not able to locate it; I do have a photocopy of the document.
I have to come to know that now I need to register a FIR, get an indemnity bond with an application addressed to the issuing post office.
My querry is that:
1. I am not clear which indemnity bond form is required in my case?
2. Is there any other document required which I am missing?
3. What may be the reissue fee & how much time this may take?
4. Any other useful tip to get this resolved ASAP.
I would highly appreciate your advise on this.
Thanks & Regards,
Basant Agrawal
Hi,
I have taken a loan from a person against my NSC certificates as security deposit with him.
Is there a possibilty of any unknown person claiming on my NSC certficates and get it encashed from any local post office without my knowledge?
Can post office officials just pay to anyone holding NSC certificates other than the actual person or the nominee???
Thanks for your help in advance…
I have NSC certificate at amount of 20,000/- and i have miss placed the original NSC certificate and have zerox copy.
Kindly request you to guide me for procedure to issue duplicate NSC certificate.
Regards,
Rashesh Joshi
Hi Vishal,
I do not believe NSCs can be encashed without the signature of the person who has bought the certificates.
Hi Rashesh,
Please see the details in my answer to the query “Lost NSC – how to get a duplicate?” by “Basant”, dated Mar 26, 2009.
I bought some NSC from the Delhi Post Office. Now it is matured. But I am residing currently in Bangalore. Can I ecash it in any post office in Bangalore or I had to go to Delhi?
Hi Bikash,
You can get these NSCs encashed at any post office.
As per the guidelines, the encashment is done on the same day at the original post office, whereas it can take upto 30 working days if encashed in any other post office.
Hello,
I am currently in USA. My NSC will mature next month of July. It is in the join investment of me and my wife. I am planning to visit India after maturity date.
Question Since I am visiting alone Do I need my wife\’s signature or presence at Post office during the time of encashment? It will be a matured amount of 11 lacs so how many days to get the bank cheque in the original post office after applying for encashment?
Thanks a lot in advance….
Arijit
Hi Rahut,
U earned so much, Howz mallika
Hi Arijit,
Usually, at the time of encashing the NSC on maturity, the holders need to sign on the back of the certificate in front of the postmaster.
Thus, the post office may insist on your wife also signing the certificate in front of them, especially since the amount is large.
Hello,
I have lost/misplaced my NSC certificates which i invested in 2003. Now in coming jan 2010 they will be mature. I have read the instruction that you have refered in order to get the dup copy of same. But you refered to contact the police station if i have the copy or the date etc. I just remmber it was in dec/jan 2003 when i invested this. Please guide me what can i do inorder to get the same. Many thanks in advance.
Hi Raj,
When you bought the NSCs, you must have been given an “identity slip”. This should help you get a duplicate certificate.
Hi,
One of me relatives invested their money in NSC and after its maturity i collected the cheque on their behalf( they dont live in india now). I have lost the cheque now.
Is there any possibility that i can get new cheque or can anything be done about this?
Regards,
AG
Hi AG,
I am sorry, but I am not aware of the procedure in this case.
I am sure a duplicate cheque would be issued, but I do not know the process that needs to be followed.
Hi,
I have a query regarding tax calculation related to accrued interest.
I have taken NSC certificates since past 4 years.
I pay the tax on the accrued interest every year.
So if the tax is paid every year till maturity there wont be
any tax liabilty at maturity right?
I wanted to know whether paying tax every year on the accrued interest is better / paying it one time after 6 years is better ?
Please advice.
Thanks,
Maulik
Hi,
I have a query as my NSC certificate is going to matured within 2 days. If i go to the post office after the matrurity date will i be getting the money on the same day.?
Pls advise.
Thanks
Thomas
Hi Thomas,
If you go to the post office where the NSC has been issued, you should get the money on the same day.
Hi Maulik,
You do not have an option to pay the tax at the end of 6 years. You have to pay the taxes every year on the interest earned – and you have been doing the right thing.
There would not be any additional tax liability at the time of maturity – you would only need to pay the tax on the interest accrued in the last year.
Hi,
I have taken NSC which have matured in 2008 but since I was out of India I could not encash them. If I don’t encash them, will I still be getting the interest on them?
Regards,
Shashvat
Hi Shashvat,
Yes. Post maturity, interest is continued to be paid upto 24 months for NSCs.
Hi Hardik,
As I always recommend, the best way to ensure that there is no foul play (for any investment) is to fill the form yourself.
If that is not possible, you should at least read it thoroughly before signing.
why we are not getting name of nomiee in national saving certificate. so if agent can make any kind of troule with nomiee who i can know.
in national saving certificate who will received money legalher
or nomiee even though nomiee is not a legalher.
nomiee have right to take any money for national saving certificate if he is not a legal her. or only legal her have right to cliam according ro succession law.
Hi Utsavee,
As per Indian law, a nominee is only a trustee of the money he / she collects. Ultimately, the money has to go to the legal heirs if the nominee is not the legal heir.
Hi Hardik,
As mentioned above, a nominee is only a trustee of the money he / she collects.
So, even if he / she collects the money, it has to be handed over to the legal heirs if the nominee is not the legal heir.
Hi Raagvamd,
I have NSC bonds of two lakhs in the denomination of the 10,000/- each. One lakh is on my wife and another one lakh is on my name (Sridhar). This NSC bonds are taken by us in 2006 and we are in need of money, can I prematurely encash the amount. If I can, what is the procedure please explain.
Hi Vivek,
Please see my answer above.
Hi Sridhar,
Premature withdrawal from NSCs can not be done – unless the holder dies or if a court orders it.
However, NSCs can be pledged to banks, and you can take a loan against it. Please talk to your bank to know the exact procedure they follow for giving loans against NSCs.
Dear Sir,
Please explain us the procedure for premature encashment of NSC certificates since I need the money urgently for some purpose.
I dont mind if I dont receive the full interest as well.
Warm Regards,
Vivek
I lost my NSC bought in 1997 in Mumbai. Lodged police complaint + went to post office with a request to issue duplicate certificate. I live in Bangalore now and cannot travel to Mumbai as often.
Can you please advise the process of getting duplicate NSC. I want to go to Mumbai once fully prepared; therefore, pl advise what documents I need to take and what can be done in Bangalore.
During my last visit, the post office gave me a copy of indemnity bond (form). What else is required, who signs it. I do not know any gazetted officer etc..
Regards
Ash
Hi Ash,
Please check my reply to “Basant”, given on 26 Mar, 2009.
Hi,
I want to know the ammounts we have to mention for tax exemption for NSC.
If we take a NSC bond on April 1st in a year(say 2010) for 1000 can we have tax exemption for accured interest during the year(can we apply exemption during the current year). what happens if we take a NSC on Jan 1st 2010 for 1000 rs and can we put 81.6 as accured interest?
Hi,
I have an NSC certificate that is held jointly by me and my mother. The first name on the certificate is mine followed by my mother. I need to know if i can claim deduction under 80C on the certificate.
Thanks
Hi
I lost My NSC certificate,I don’t have any details such as certificate number and the exact date etc, only I know the amount and the owner’s name , the maturity month, the post office and the agents name…Can I get the duplicate NSC?…Is their any record in Post office for NSCs….Kindly advice what to do now…
Hi,
My father died last year in april,he has 2 sets(4 each of Rs.10000)NSC certificates left behind to be collected by me(nominee).Now,i’m in urgent need of money,and,wish to encash them prematuredly(the maturity time is in september 2011).But the post office is telling me that it would take around 3 months or much more to encash the certificates.They are also telling me that they are not going to give the cash/cheque themselves as I reside in another place,and that I have to contact my local post office in order to get the money.Sir, can you plz tell me the exact timing to get the money,and what they are telling is true or not?????It will be very helpfull for me as I need the money urgently.
Hi,
This is really useful. Too good.
I have NSC purchased from Indore and now am staying in Chennai. For encashment, Can I send the original NSCs to my relatives at Indore with a Authorization Letter? In that case should I sign the Certificates and send to Indore? Is the signature be done on a Revenue Stamp?
Kindly advise.
I bought a few NSCs with the naming format of Raji &. Now can i use these forms to declare for tax deduction for myself? will 2 names in it cause any problem?
I have lost my NSC certificates and I also don’t have their details like number, date of issue etc.The only thing that I have is the copy of acknowledgment slip from the agent through whom I had taken the certificates.The slip does not have any NSC details. only the cheque number,amount and date.
Whats the process now for getting duplicates when I don’t know the details as well?Would the agent from whom I had taken the certificates be having the details atleast?
Hi
I bought NSC of RS 30000 . I transferred it to my home district i am leaving in Bangalore . The postmaster in bangalore said after one month go and take the new certificate from your home district post office . I sent that nsc to my parents one of them is nominee . are they able to get new by the submission of older one ?
or can i get the newer when i have time to go my home district after four five month down the line ?
will it affect the maturity period?
Please advise me
Thanks
While i have read the process of issuing the duplicate certificate, i am not sure of the reason why the post office has asked for Surety Certificate and demands that both the Certificate Holder and Surety person should be present physically to submit the application. Please advise
Hi,
I hope you can help me….please. I purchased NSC’s in 2006 and i lost them. I do not have any details of numbers or counter slip etc. What cani do to get them reissued. PLease help.
Hi Raagvamd ,
my NSC has been matured.
I bought it from b’lore but now I line in pune.
I know I can get it encashed from any post office.
But can you tell me what other documents I may require other than NSC certificate itself.
Actually, I visited a post office in pune & they asked me to write an application mentioning all the details INCLUDING ADDRESS.
& the problem is I don’t remmeber my six years back address.
What should I do?
Hi,
I bought NSC in 2000 and totally forgot about it. Can you let me know if it would still be valid?
Also, if I go to the postoffice in another city, do I need anything other then the NSC certificate?
Thanks,
R
can i encash nsc on behalf of my brother.what documents will i need
Hi,
I bought 2 NSC’s (Rs 5000 and Rs 10000) in 2001 and the maturity was in 2007. what is the process of encashing these certificates now (as I am overseas and will be visiting India soon). Will I get interest of the extended period as well? Or can I extend the same to another 6 years? Please advise.
I have lost my NSC certificate. I have the photo copy of the same and also hv the copy of the FIR. I went to the court for the indemnity bond, but nobody over there knows about the performa of the same. I hv asked the POST OFFICE for the same but they also denied about the performa of the indemnity bond. Please help me on this if anybody have got indemnity bond.
regards
Rajesh Warna
PRINTED FORMS AVAILABLE WITH POST OFFICE. PL. CHECK AGAIN.
Hi,
The interest income on NSC for first five years is exempt from tax U/s 80C. If an assessee purchases NSc in the mid of F.Y> like say November .Now in his IT return can he claim accrued interest Of Rs. 80.16 on Rs. 100 for full year or interest will be calculated proportionately for 4 months?
Hi Mohan,
Looks like there is a misunderstanding – the interest earned on NSC is NOT exempt from income tax. It is fully taxable – it is clubbed with your income as is taxed as per the income tax slab applicable to you.
Only the investment made in the NSC is tax deductible under section 80C.
Hi, I have lost my NSC certificate…and done have a copy of the same. I dont even have the certificate number or Date of issue….but I know its getting matured in Jan 2012. Pl let me know the procedure to get a duplicate of the same.
Also pl let me know if someone gets the Certificates….can he/she withdraw the money?
Regards
Dear Sir,
I am NSC holder since 2003. But i lost my NSC certificate.
How i get this money from post office ?
I have not NSC No.also.
Then what i will do ?
Thanks & Regards,
Dilip Dahibhate
Kothrud, Pune 411029
Mob. 7276341225.
My question is that my annual salary is 3 lacs per annum, i want to invest in NSC to save tax, so how much should i invest in NSC, as i dont have done any investment yet. Can i withdraw my money after 1 year in NSC?
Thanks
Shaan
Hi,
I purchased NSC from PO Janglat Mandi, Anantnag (J&K) on dated 10-10-2005. I am in a transferable job. On the date of maturity i.e. on 10-10-2011, I applied for its transfer/ encashment at Head PO Nayapura, KOTA (Raj.). I mentioned my Mobile number in the application. There the PO staff says that it would take a month so I should contact after one month. After one month when I personally approached at PO Nayapura, Kota(Raj.), the PO staff gave me my application back and told me to contact the PO from where I purchased the NSC. Now it is not possible for me to go to Anantnag, as it is too far, expensive, time consuming and adverse route. Suggest me the alternate solution for the encashment of NSC’s.
Thanking you in anticipation,
Ramesh Chand
gold bond loos
I have NSC purchased from Bangalore and now am staying in Kolkata. For encashment, Can I send the original NSCs to my relatives at Bangalore with a Authorization Letter? In that case should I sign the Certificates and send to Bangalore? Is the signature be done on a Revenue Stamp?
Kindly advise.
Jmtp
My NSC is getting matured n i had done my investments through a broker,now he has given me a form where my sign as well as my NSC serial nos are required,is it safe that he goes n get my cheque n it is encashment form ,please help since this is my 1 time.
thanks
hai iam ram i hav read in ur website that NSC can be withdrawn with a penalty may i know d procedure please because in postoffice they r saying that premature withdral is not possible
I have NSC of Rs 50000/- & the maturity date is may 2013 I have some problem Can I encash the premature NSC
I have purchased Nsc of Rs.50000/- maturity date may 2013
can i encash the premature NSC