The Investment Avenue: National Savings Certificate (NSC) for NRIs

Unlocking the Potential of NSC for the Non-Resident Indian Community
January 10, 2024
min read

Understanding National Savings Certificate (NSC) for NRIs

The National Savings Certificate (NSC) is a fixed income investment scheme that you can open with any post office in India. It's a government savings bond primarily used for small and mid-income investors to save while getting a tax break. NSC offers a fixed interest rate and comes with low risk.

Although NSCs are a popular investment vehicle for residents of India, Non-Resident Indians (NRIs) often inquire about their eligibility and the associated benefits. The rules for NRIs participating in NSC are different and merit close attention to detail for those in the NRI community looking at this investment option.

Eligibility Criteria for NRIs

Initially, NRIs could invest in NSC if they made the purchase while being Indian residents. However, new amendments state that NRIs are no longer eligible to purchase NSC certificates. If NRIs had bought NSC while being resident Indians, they are allowed to keep the certificates until maturity.

This restriction has imposed a need for NRIs to look at alternative investment strategies that align with their status while balancing the desire for stable and safe investment options.

Handling NSC Investments Post Maturity

Upon maturity of an NSC, the maturity amount can be credited to an NRO account. While direct repatriation of the maturity proceeds overseas is not allowed, funds from an NRO account can be repatriated subject to applicable conditions in the foreign exchange regulations dictated by The Reserve Bank of India (RBI).

This option to remit the funds to an NRO account offers a structured approach to investment and fund management for NRIs but also introduces several layers of regulation that need to be navigated carefully.

NSC Tax Implications for NRIs

While resident Indians can claim a deduction for the amount invested in NSC under Section 80C of the Income Tax Act, the same benefit is not easily transferred when the investor becomes an NRI. Interest income on NSC is considered taxable under 'Income from Other Sources'. It is paramount for NRIs to understand the tax implications in India and their country of residence to effectively manage potential tax liabilities.

Investing in NSC as an NRI: A Strategic Choice?

As NRIs consider NSC as part of their investment portfolio, it is crucial to weigh the option against other available investment opportunities abroad and in India. This decision requires a multi-faceted evaluation of factors such as risk tolerance, investment horizon, and tax obligations.

This detailed exploration provides NRIs with insights into the potential for NSC as an investment vehicle and how it compares with other global opportunities, ensuring a well-informed investment strategy.

Alternatives to NSC for NRIs

Since NRIs are not eligible to invest in new NSC accounts, they have to look for other investment avenues. Some of the options they consider are fixed deposits in Indian banks that offer NRI services, investment in Indian stock markets through Portfolio Investment Schemes (PIS), mutual funds, and direct equity investments.

Other government-backed securities such as bonds or unit-linked insurance plans (ULIPs) are also potential alternatives. NRIs can also explore real estate investments, either for personal use or as an investment, though it comes with its own set of challenges and risks.

Before making any investment decisions, it is crucial for NRIs to consider the aspects of liquidity, repatriation, and taxation. Consulting with a financial expert who understands the NRI investment landscape can also add significant value to the decision-making process.


The opening up of the Indian economy has presented a plethora of investment options for the NRI community. Although NSC may no longer be an option, there are several other avenues to explore. With the right guidance and strategic planning, NRIs can create a diversified investment portfolio that aligns with their long-term financial goals and provides the benefits of growth, stability, and security.

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