National Savings Certificate (NSC): Interest Rates 2025-26
The NSC is still a mainstay of small savings schemes in India, as it ensures a safe and official way to invest. On April 1, 2025, the initial date of the 2025–26 fiscal year, the NSC is providing an interest rate of 7.7% per year, which is calculated on an annual basis. Since January 2024, the rate has not changed, which indicates that the government is firm in committing to stable investment returns.
Key Features of NSC for FY 2025–26
- Interest Rate: 7.7% per annum, compounded annually.
- Tenure: 5 years.
- Minimum Investment: ₹1,000.
- Maximum Investment: No upper limit.
- Tax Benefits: Investments qualify for deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh per annum.
- Premature Withdrawal: Generally not permitted, except under specific circumstances like the investor’s death or court orders.
Interest Rate Trends and Government Policy
The rates offered by NSC and other small savings schemes are looked at and may be updated by the Ministry of Finance every quarter. In April–June of 2025, the government decided to hold the NSC interest rate at 7.7%, making this the fifth straight quarter without any rate changes. The stability offers a set return, which attracts investors when the economy is not stable.
Comparative Analysis with Other Small Savings Schemes
NSC is shown below, along with other renowned small savings instruments for the April–June 2025 quarter:
- Public Provident Fund (PPF): 7.1% per annum.
- Senior Citizen Savings Scheme (SCSS): 8.2% per annum.
- Sukanya Samriddhi Yojana (SSY): 8.2% per annum.
- Kisan Vikas Patra (KVP): 7.5% per annum, with maturity in 115 months.
Even though SCSS and SSY offer better interest rates, you must meet certain conditions and have a certain investment amount in each to qualify. In contrast, NSC is available to all Indian residents with no maximum investment limit, so it suits almost anyone.
Tax Implications
You can get tax benefits on your NSC, up to ₹1.5 lakh per year, as set out in Section 80C of the Income Tax Act. While the interest gets taxed, any interest earned and kept for a year can be eligible for a tax deduction under Section 80C. Interest earned on NSCs is not subject to Tax Deducted at Source (TDS), which helps to simplify the taxes for investors.
Suitability for Different Investor Profiles
- Risk-Averse Investors: NSC guarantees a stable return that is supported by the government, which is why it is good for people looking to protect their capital.
- Taxpayers: Tax planning is made simpler because of the Section 80C deduction on NSCs.
- Long-Term Planners: You are encouraged to save long-term since the NSC lock-in lasts for five years.
- Senior Citizens: Since SCSS gives a higher return, NSC can be invested by seniors who have already reached the SCSS limit.
How to Invest in NSC
NSCs are sold at all India Post offices across the country. The process is straightforward:
- Visit: Any post office branch.
- Fill: The NSC application form.
- Provide: Identity verification is done by submitting Aadhaar and PAN documents.
- Pay: The method of payment can be cash, cheque, or demand draft.
- Receive: Investors receive their certificates either in physical or electronic form, depending on the choice.
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The National Savings Certificate remains a solid and simple way for Indian residents to invest their money in FY 2025–26. Because it has a guaranteed 7.7% interest rate per annum, offers tax benefits and is backed by the government, NSC is right for a variety of investors interested in secure savings. It helps to look at your investment strategy and discuss this further with an adviser before choosing NSC.
