NSC for NRIs: Can non-resident Indians invest in National Savings Certificate and claim tax benefits?

Transitioning to Non-Resident Indian (NRI) status can change your eligibility for several investment options in India, including the National Savings Certificate (NSC). Backed by the government, NSC has long been a popular choice among risk-averse investors looking for assured returns and tax benefits.

But what happens to your NSC investment if you move abroad and become an NRI? Can you continue investing, or claim tax benefits? Here’s what the rules say.

Can NRIs purchase NSC and claim tax deductions?

NRIs can invest in several Indian financial assets, including stocks, mutual funds, fixed deposits and real estate. However, some investment schemes are meant exclusively for resident Indians.

The NSC falls into this category. NRIs cannot open a new NSC account or purchase a fresh certificate. However, if you invested in NSC while you were a resident Indian and later became an NRI, you can continue to hold the certificate until it matures.

The NSC currently offers an interest rate of 7.7% per annum for the July-September 2026 quarter. Small savings scheme interest rates are reviewed and announced by the government every quarter.

The interest on NSC is compounded annually. However, you do not receive the interest payout every year. Instead, the accumulated interest is paid along with the principal amount when the certificate matures.

Key features of NSC

You can start investing in NSC with as little as ₹1,000, with additional investments allowed in multiples of ₹100.

There is no maximum investment limit, allowing eligible investors to invest according to their financial goals and capacity.

NSC investments also qualify for a deduction under Section 80C for taxpayers opting for the old tax regime, subject to the overall deduction limit available under the section. This is one reason why NSC remains a popular tax-saving option among eligible resident investors.

Can you withdraw NSC before maturity?

NSC is generally designed to be held until maturity, and premature encashment is allowed only in specific situations.

For instance, premature closure may be permitted in the event of the death of the account holder in a single account, or the death of one or more account holders in a joint account.

Closure may also be allowed if the certificate is forfeited by a pledgee who is a gazetted government officer, provided the pledge meets the applicable scheme rules. In certain cases, a court order may also permit premature closure.

If an NSC is closed before completing one year from the date of investment, the investor is entitled only to receive the principal amount.

Where the account is closed after one year but before completing three years, interest is payable on the principal at the Post Office Savings Account rate applicable from time to time. The interest is calculated for the full months the account was held.

Can an NSC be extended after maturity?

Unlike certain other post office savings products, such as the Public Provident Fund (PPF) and Senior Citizen Savings Scheme (SCSS), an NSC does not offer an extension facility.

Therefore, once the NSC reaches maturity, it cannot simply be extended for another term under the existing certificate.