NSC Calculator

How NSC works

National Savings Certificate (NSC) is a post office savings scheme backed by the Government of India. You invest a fixed amount at a branch, receive a certificate, and collect the full maturity amount after 5 years. There are no periodic interest payouts -- all interest compounds within the scheme and is paid together at the end of the 5-year term.

The current rate is 7.7% per annum for Q1 FY2026-27 (April to June 2026), as notified by the Ministry of Finance on 30 March 2026. This rate is locked in at the time you invest; even if the government revises rates in future quarters, your certificate continues earning 7.7%.

The 5-year lock-in and what it means in practice

Unlike a bank fixed deposit, NSC does not allow premature withdrawal under normal circumstances. The money is locked in for the full 5 years. The only exceptions are the certificate holder's death, a court-ordered forfeiture, or encashment by a pledged lender. If you anticipate needing the money within that window, NSC is not the right instrument -- a liquid fund or a short FD makes more sense.

That said, you can pledge an NSC certificate as collateral against a loan at a bank or NBFC, which gives you access to liquidity without breaking the investment.

Section 80C: principal and deemed-reinvested interest

NSC gives you two layers of 80C benefit. First, the amount you invest qualifies for deduction in the year of purchase, within the Rs 1.5 lakh annual limit. Second, the interest that accrues in years 1 through 4 is treated by the Income Tax Act as "deemed reinvestment" -- meaning the government considers it as fresh investment in that year, so you can claim those interest amounts as additional 80C deductions year after year.

Only the interest accrued in year 5 falls outside this treatment. That amount is added to your income in the year of maturity and taxed at your applicable slab rate. The table above shows the exact interest figure for each year, so you know what to claim and what to report.

Worked example: Rs 1 lakh at 7.7%

You invest Rs 1,00,000 in NSC at the current 7.7% rate. Using the formula Maturity = 1,00,000 x (1.077)^5:

The Rs 44,903 total interest represents a 44.9% absolute return over 5 years on a government-guaranteed instrument. For someone in the 30% tax bracket, the 80C deductions on years 1-4 interest reduce the effective tax cost meaningfully -- adjust the calculator above to your own investment amount to see exact figures.

Taxation of NSC interest

NSC interest does not have TDS deducted at source. It is your responsibility to declare the accrued interest each year in your ITR under "Income from Other Sources," and to claim the simultaneous 80C deduction for years 1-4. At maturity, you receive the full amount; the net tax is determined by how you filed across those 5 years. If you have been claiming 80C on the deemed reinvestment each year, only the Year 5 interest remains as taxable income in the year of encashment.

Frequently asked questions