Budget 2026: National Savings Certificate — Definition, features, tax benefits, who should invest

As the Union Budget 2026 is set to be presented in Parliament on Sunday, 1st February 2026 at 11 am, attention is also on safe and tax-efficient savings options backed by the government. One such instrument is the National Savings Certificate (NSC), a fixed-income scheme that offers guaranteed returns along with tax benefits under Section 80C.

What is a National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a secure, government-backed fixed-income investment scheme that is available at post offices/banks. It is primarily designed for small and middle-income investors looking for a secure savings avenue.

The scheme comes with a fixed interest rate of 7.7 per cent per annum for Q4 of FY 2025–26 and has a lock-in period of five years, ensuring predictable returns with minimal risk.

Key features and benefits of NSC

NSC offers guaranteed returns since the interest rate is fixed by the government. The minimum investment required is Rs. 1,000, with no upper investment limit. Investments made in NSC qualify for tax deductions of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act (old tax regime).

Interest earned during the first four years is reinvested, and this reinvested amount also qualifies for tax deduction under Section 80C. However, interest earned in the fifth year is taxable, as it is paid out on maturity.

There is no TDS on NSC maturity proceeds, and the investor must pay applicable tax, if any. NSC certificates can also be used as collateral for secured loans from banks and NBFCs.

Who should invest in NSC?

NSC is suitable for risk-averse investors, first-time investors, and those planning long-term savings. It is particularly useful for salaried individuals who have not exhausted their Section 80C limit and want to reduce taxable income while earning stable returns.

Eligibility criteria

Only Indian residents are eligible to invest in NSC; NRIs are not permitted. Accounts can be opened by individuals, jointly (up to three holders), or by guardians on behalf of minors. HUFs and trusts are not eligible to invest under this scheme.