NSC and Kisan Vikas Patra: how the two certificates work and how they differ

NSC and KVP are two savings certificates sold at post offices. A certificate here is the record of your deposit, now held electronically. The Ministry of Finance sets the rates every quarter.

Two ideas about them keep going around, and both are wrong. Kisan Vikas Patra is not only for farmers, and the interest on a National Savings Certificate is not tax-free. The rest of this article shows how each one pays, when you can get out, how to buy and how the tax works.

What is a National Savings Certificate?

A National Savings Certificate (NSC) is a five-year savings certificate sold by the post office: you put in ₹1,000 or more once, and your money and its interest come back together at the end. The day the five years finish is called maturity.

For certificates bought in October–December 2026, the rate is 7.7% a year. The Ministry of Finance announced it by Office Memorandum on 30 September 2026, and it left the rate unchanged from the previous quarter. Once you buy, that certificate keeps the rate it was bought at.

Who can buy:

• An adult, for themselves.
• A guardian, on behalf of a child or a person of unsound mind.
• A child who has turned ten, in their own name.
• Up to three adults together, as a joint holding.

The minimum is ₹1,000, in multiples of ₹100. There is no maximum, and one person may hold any number of certificates. Only a resident citizen of India can open one. NSC is still on the list of nine schemes that the National Savings Institute publishes.

The Ministry of Finance runs these schemes. Money put into the certificates is credited to the National Small Savings Fund, a public account set up in 1999. DICGC deposit insurance is for bank deposits and does not extend to them.

How does NSC interest work?

NSC interest is added once a year, earns interest itself in the later years, and nothing is paid out before the fifth year. That yearly build-up is compounding: interest that is added to the amount and then earns interest too.

Here is ₹50,000 put into an NSC bought in October–December 2026 at 7.7% a year, rounded to the nearest rupee:

Add it up and the ₹50,000 becomes ₹72,452 at the end of year five, about ₹22,452 of it interest. This is a calculation on the stated rate, not a forecast. India Post's own table gives a quick check: ₹10,000 becomes ₹14,490.

The rules say the interest earned in years one to four counts as reinvested, which is why year two's interest is larger than year one's. You cannot draw the interest out as income along the way.

What is Kisan Vikas Patra?

Kisan Vikas Patra (KVP) is a post office certificate that doubles the amount you put in after a fixed number of months, and despite its name any resident adult can buy it, not only farmers. The rules for who may buy never mention farming.

The buyers and the limits match NSC: an adult, a guardian for a child, a child from the age of ten, or up to three adults jointly. The minimum is ₹1,000 in multiples of ₹100, there is no maximum, and you may hold any number. KVP also appears on the National Savings Institute's list of nine schemes.

For large amounts, the post office can ask where the money came from. You need Aadhaar and PAN to open any post office scheme.

How long does KVP take to double your money?

A KVP bought in October–December 2026 doubles in 115 months, which is 9 years and 7 months. The rate for that quarter is 7.5% a year, compounded yearly. That means ₹50,000 becomes ₹1,00,000 after 115 months.

The months are fixed by the rate on the day you buy. The rules say the maturity period "shall be determined on the rate of interest applicable at the time of opening the account". A certificate bought in another quarter can therefore take a different number of months.

Can you cash an NSC or KVP early?

Neither certificate is meant to be cashed early. Both carry a lock-in, which is a period when you cannot take your money out.

NSC. Early closure, which the rules call premature encashment, is allowed only in three cases:

• the holder dies (for a joint account, any or all holders);
• a lender holding the certificate as a pledge enforces it;
• a court orders it.

Even then, the amount is fixed by the rules and is less than the full five-year value.

KVP. A KVP is built to run to maturity. In the first 2½ years the rules allow closure only on the holder's death, a court order or a lender enforcing a pledge. After 2½ years the post office pays an amount from a table in the rules, and that is less than the doubled value.

A pledge means handing the certificate to a lender as security for a loan. The rules allow both certificates to be pledged or transferred as security to listed bodies, including a scheduled bank, a co-operative society, a government company and the Reserve Bank of India. Apart from that, a certificate passes to another person only on death, by a court order, by pledging or to a surviving joint holder. A nominee, the person you name to receive the money, or a legal heir can continue the account.

For a resident holder, money left uncashed after maturity earns only the post office savings-account rate, 4% for October–December 2026. An NRI holder earns nothing after maturity.

How do you buy NSC or KVP online?

You can buy NSC and KVP online through India Post's internet banking if you already have a post office savings account. Both are held electronically now, not as paper certificates, a change that took effect in April 2016. If you lose the record, a duplicate is issued in the form of a passbook.

Without a post office savings account, you open them at a post office. You need your Aadhaar and PAN. Since April 2025, a single adult account for NSC or KVP can also be opened with Aadhaar e-KYC, the electronic identity check.

Some banks also sell these certificates. Ask your bank which schemes it handles.

A non-resident Indian (NRI) cannot buy a new certificate. Someone who bought while resident and later becomes an NRI may hold it only until maturity. The rules say the money is paid only on a non-repatriation basis. The certificate cannot be extended, and it earns no interest after maturity.

How are NSC and KVP taxed?

The money you put into an NSC counts under section 123 (the old Section 80C), but only under the old regime, and only within ₹1,50,000 across every item that qualifies. A KVP gets no such deduction. The interest on both is taxed at your slab rate.

Some of those terms need a word:

• Section 123 (the old Section 80C) is the part of the Income-tax Act, 2025 that covers this deduction. It lets you subtract certain investments from your taxable income.
• The old regime is the tax system that keeps such deductions. The default regime is the one that applies unless you choose the old one. It does not allow this deduction.
• Slab rate is the tax rate for your income band.

An example: put ₹50,000 into an NSC in tax year 2026-27 under the old regime. If your income before the deduction is above ₹5,50,000 and no more than ₹10,00,000, the whole ₹50,000 sits in the 20% slab. The saving is then ₹10,400: ₹10,000 of tax plus ₹400 of cess, an extra 4% on the tax. If your income before the deduction is above ₹10,50,000, the whole amount sits in the 30% slab and the saving is ₹15,600. That holds while your total income is not above ₹50 lakh, the point where surcharge starts. Both figures assume the ₹1,50,000 limit is not already used up by other investments.

The interest is not exempt. It is added to your income and taxed at the slab rate. The year it is taxed follows the method you normally use to report income: either as it builds up (accrual) or when you receive it.

For the full list of items that count, see deductions under section 123. For the two regimes, see the new tax regime explained. To compare tax-saving options by lock-in and risk, see PPF, ELSS and NPS compared.

NSC vs KVP: what is the difference?

An NSC runs five years and can save tax under the old regime. A KVP bought in October–December 2026 runs 115 months, doubles your money and saves no tax.

For the other schemes, see post office savings schemes. For how these certificates sit next to other options, see investment options in India. If a child is the holder, post office schemes for a boy child goes into it. For where government-backed savings sit on the risk scale, see safe investments in India.