Many Indians prefer safe and guaranteed investments, and Post Office schemes remain one of the most trusted options. Among them, the National Savings Certificate (NSC) continues to be highly popular, especially with middle-class families and salaried individuals, because it combines security with decent returns backed by the Government of India.
Tenure: Fixed maturity period of 5 years.
Minimum Investment: ₹1,000.
No Maximum Limit: You can invest any amount (subject to practical financial limits).
Government Guarantee: Returns are fully backed by the central government.
Tax Benefits: Investments up to ₹1.5 lakh are eligible for Section 80C deduction under the Income Tax Act.
Current Interest Rate: 7.7% per annum, compounded annually.
Interest is not paid annually but accumulates and is given out at maturity.
After 5 years, you can reinvest in a new NSC at the prevailing interest rate.
If you invest ₹15,00,000 in NSC at 7.7% interest for 5 years:
Maturity Value: ₹21,73,551
Total Interest Earned: ₹6,73,551
This makes it an attractive and safe fixed-return investment option.
Certificates are available in multiples of ₹100, ₹500, ₹1,000, ₹5,000, and ₹10,000, making it convenient for both small and large investors.
The annual interest accrued on NSC is treated as income and must be declared in your Income Tax Return (ITR) each year.
For instance, if you invest ₹1,00,000, the first year’s interest of ₹7,700 needs to be shown as income.
This ensures compliance and prevents future tax issues.
Safe: Zero risk, as it is government-backed.
Stable Returns: Fixed rate throughout the 5-year tenure.
Tax Advantage: Section 80C benefits.
Flexible Investment Size: Accessible to both small savers and large investors.
| Feature | NSC (National Savings Certificate) | PPF (Public Provident Fund) | KVP (Kisan Vikas Patra) | Post Office Time Deposit (FD) |
|---|---|---|---|---|
| Tenure | 5 years | 15 years (extendable by 5 years) | 9 years & 7 months | 1, 2, 3, or 5 years |
| Interest Rate (2025) | 7.7% (compounded annually) | 7.1% (compounded annually) | 7.5% (compounded annually) | 1 Yr: 6.9% 2 Yr: 7.0% 3 Yr: 7.1% 5 Yr: 7.5% |
| Minimum Investment | ₹1,000 | ₹500 | ₹1,000 | ₹1,000 |
| Maximum Investment | No limit | ₹1.5 lakh per year | No limit | No limit |
| Tax Benefits | Section 80C (up to ₹1.5 lakh) | Section 80C + Interest fully tax-free | No tax benefit (except transfer exemption) | 5-year FD eligible under Section 80C |
| Liquidity | Lock-in 5 years (no premature withdrawal except in rare cases) | Partial withdrawal allowed after 5 years | Premature encashment after 2.5 years | Premature withdrawal allowed with penalty |
| Safety | Govt. of India guarantee | Govt. of India guarantee | Govt. of India guarantee | Govt. of India guarantee |
| Example (₹15 lakh investment) | Maturity in 5 yrs: ₹21.73 lakh (interest ₹6.73 lakh) | After 15 yrs: ~₹41.1 lakh (interest ~₹26.1 lakh) | After 9Y7M: ₹30 lakh (investment doubles) | 5-yr FD: ~₹21.75 lakh (interest ~₹6.75 lakh) |
Summary for Readers:
Short-Term & Guaranteed Returns → NSC / 5-Year FD
Long-Term Wealth Creation + Tax-Free Interest → PPF
Money Doubling with Medium-Term Lock-In → KVP