Last Updated on May 3, 2023 by Anjali Chourasiya

National Savings Certificate (NSC) is a popular fixed-income investment scheme backed by the Indian Government. It is specifically for small to mid-income investors to encourage them to invest while saving on taxes. This is most commonly preferred by investors looking for a short-term, low-risk investment. In this article, learn about the scheme’s interest rate, maturity date and whether NSC interest is taxable. 

NSC interest rate

It is decided by the government every quarter. The NSC interest rate for January – March 2023 is 7% p.a., compounded annually. Here’s the NSC 5 yrs interest rate chart:

PeriodInterest rate p.a. (in %)
October 2022 to December 20226.80
July 2022 to September 20226.80
April 2022 to June 20226.80
January 2022 to March 20226.80
October 2021 to December 20216.80
July 2021 to September 20216.80
April 2021 to June 20216.80
January 2021 to March 20216.80
October 2020 to December 20206.80
July 2020 to September 20206.80
April 2020 to June 20206.80
January 2020 to March 20207.90
October 2019 to December 20197.90
July 2019 to September 20197.90
April 2019 to June 20198.00
January 2019 to March 20198.00
October 2018 to December 20188.00

What is the interest in premature withdrawal? 

The maturity date of the scheme is 5 yrs from the date of deposit. Before the maturity period, the investment cannot be liquidated/withdrawn. However, under certain circumstances, the certificate holder is allowed to make a premature withdrawal. The circumstances include


  • The death of the certificate holder.
  • If the certificate gets forfeited. 
  • if the court passes an order to withdraw the investment. 

The interest offered on NSC on premature withdrawal is:

  • If the investment is withdrawn before 1 yr of the deposit date, no interest is provided.
  • If the investment is withdrawn after 1 yr of the deposit date, the interest is provided as per the prevailing rate.

Is NSC interest taxable? 

The annual interest accumulated on the National Savings Certificate is added to the original investment. The accrued interest is eligible for a tax rebate under Section 80C of the Income Tax Act. 

It is to be noted that, as the maturity period of 5yrs, the interest is reinvested only for the first 4 yrs of the investment period. In the 5th yr, the interest earned is given to the investor. So the tax rebate is provided on the interest accrued in the first 4 yrs of the investment. 

The maximum interest amount for tax benefits under Section 80C is Rs. 1,50,000. If the interest exceeds the limit, the certificate holder will not be eligible for the tax benefit.

Is NSC tax-free?

The investment made in the NSC scheme is eligible for tax deduction under Section 80C of the IT Act. But the maximum investment is allowed for a tax deduction of Rs. 1,50,000. If the investment is more than the prescribed limit, the investment is taxable. 


Are NSC withdrawals taxable? 

On maturity, the NSC investment amount and interest accrued can be withdrawn. As mentioned above, the interest accrued in the 5th yr will be taxed as it can’t be reinvested. Also, Tax Deducted at Source (TDS) doesn’t apply to NSC. The investors need to pay tax as per their income tax slab. 

Frequently asked questions 

1. Is the interest rate on NSC fixed?

Yes. The Indian government fixes the interest rate on NSC. It is revised every quarter. 

2. Where can I register for NSC?  

You can invest in NSC by visiting the nearby post office. Fill out the NSC application form, submit the required documents and make your first investment. 

3. What is the lock-in period for NSC? 

The lock-in period for the National Savings Certificate is 5 yrs. An investor must stay invested till the maturity date. However, under special circumstances, the certificate holder is allowed for premature withdrawal. 

4. What is the minimum investment required in NSC?

The minimum investment required to buy a National Savings Certificate is Rs. 1,000. The investment must be in multiples of 100. 

5. What is the maximum investment that can be made in NSC?

There is no maximum investment cap in the NSC. However, the certificate holders can avail NSC tax benefits only if the investment amount is below Rs. 1,50,000 as per Section 80C of the IT Act. 

6. What are NSC tax benefits?

The interest rate accumulated in the first 4 yrs of investment on the NSC scheme is eligible for a tax rebate. The investment made on NSC is also allowed for tax deduction under Section 80C of the IT Act. 

Nikitha Devi
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