National Savings Certificate(NSC): Interest Hiked by 70 bps for April-June 2023 quarter

The most recent quarterly review of interest rates for modest savings plans resulted in a significant rise in the interest rate on the National Savings Certificate (NSC), which rose from 7% to 7.7%. This rate is fixed for five years for investments made at any time between April 1 and June 30, 2023.

Along with the NSC, the Government also updated the interest rates for a few other low-interest savings programmes, including the Post Office Term Deposits, Senior Citizens Savings Scheme (SCSS), Kisan Vikas Patra, Post Office Monthly Income Scheme, Sukanya Samriddhi Yojana and Post Office Recurring Deposit. The interest rate for the Public Provident Fund (PPF) remains unchanged.

Risk-averse investors like the National Savings Certificate, a secure savings option offered by the Indian Post Office. Similar to PPF and SCSS, NSC deposits are also eligible for a deduction under Section 80C of the Income Tax Act, subject to a yearly cap of Rs 1.5 lakh.

Tax benefits

Deposits made under the NSC are eligible for a deduction under Section 80C of the Income Tax Act.

Interest rates

While they are repaid at maturity, NSC interest rates are compounded yearly. In 5 years, an investment of Rs 1000 will increase to Rs 1403. There is no maximum investment amount for NSC; the minimum investment amount is Rs. 1000 in multiples of Rs. 100.

Premature closure

(i) Upon the passing of a single account holder, or any, all, or none of the joint account holders

(ii) Upon forfeiture by a pledgee who is an officer with a gazette.

(iii) On court order.

Transfer of NSC Account-

(i) To the nominee or legal heirs upon the death of the account holder

(ii) To the joint holder upon the death of the account holder(s)

(ii) Upon a court order

(iii) Upon account pledging to the designated authorities