Union Budget 2025 | FAQs: What is National Savings Certificate?

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman. According to reports, the Narendra Modi government may consider slashing income tax for individuals earning up to Rs 15 lakhs per annum and extend the tax relief bracket in a bid to provide relief to the middle class and boost consumption.

Here we are trying to brush you up on your knowledge of financial terms ahead of the Budget. In this context, let us have a look at what National Saving Certificates is.

The Indian government's savings bond, called National Savings Certificates, or NSCs, a part of the postal savings system of India Post, is mainly used for small savings and investments that save income taxes in India.

An adult (in his or her own name or on behalf of a minor), a trust, two adults jointly, or a minor may purchase these from any Post Office in India. Banks may accept these as collateral when granting loans, and they have a five-year maturity. According to Income Tax Act of 1961 Section 80C, the holder is entitled to a tax benefit.

Similar government savings schemes in India include the Public Provident Fund (PPF), Post Office Fixed Deposit, Post Office Recurring Deposit, and so on. In the 1950s, following India's independence, the government actively promoted the certificates in order to raise money for nation-building.

Financial institutions are no longer required to issue physical, pre-printed certificates, and as of April 2016, the Ministry of Finance made it possible to purchase and redeem these bonds electronically.