📖 Understanding National Savings Certificate (NSC)

National Savings Certificate (NSC) is a fixed-income investment scheme offered by India Post. It's a government-backed, low-risk savings instrument that offers guaranteed returns with tax benefits under Section 80C of the Income Tax Act.

There are two types: NSC VIII (5-year) and NSC IX (10-year). The current interest rate is 7.7% per annum (revised quarterly by the government). Interest is compounded annually but payable only at maturity. The interest earned is reinvested and also qualifies for Section 80C deduction.

Key features: No maximum investment limit, minimum ₹1,000, available at all post offices, no TDS deducted, can be used as collateral for loans, premature withdrawal only in specific cases (death, court order).

While NSC interest is taxable, the annual accrued interest can be claimed as deduction under 80C (as it's deemed reinvested). This makes NSC attractive for taxpayers in the 20-30% brackets. Compare with PPF, tax-saving FDs, and ELSS before investing.