NSC Calculator

How NSC Works

You invest a lump sum once. That amount earns interest at a fixed rate, set at the time of purchase and locked for the full 5 years even if the government revises the rate afterwards for new certificates. The interest compounds annually and is added to your principal, but it isn’t paid out yearly. The entire amount, principal plus accumulated interest, is paid to you in one lump sum when the certificate matures.

Current NSC Interest Rate

The NSC interest rate is currently 7.7% per annum, confirmed unchanged for the July–September 2026 quarter by the Ministry of Finance. It’s reviewed every quarter, but a rate change only applies to new certificates purchased after the change; your existing certificate keeps the rate you locked in at purchase for its entire 5-year term.

How NSC Maturity is Calculated

NSC uses annual compound interest: A = P × (1 + r)⁵, where P is your investment and r is 7.7%. Since the interest is added back to the principal each year rather than paid out, your investment grows slightly faster than it would with simple interest.

Worked Example

₹1,00,000 invested in NSC at 7.7% grows as follows:

NSC Tax Benefits

Section 80C (123) Deduction

Investments up to ₹1.5 lakh per financial year qualify for a tax deduction under Section 80C of the Income Tax Act, 1961 (renumbered Section 123 under the Income Tax Act, 2025, effective April 2026). This deduction is only available if you’re filing under the old tax regime.

How the Interest Itself is Taxed

This is the part most people miss: the interest NSC earns each year is itself taxable as “Income from Other Sources” at your income tax slab rate, even though you don’t actually receive that interest until maturity. In practice, most investors claim a matching Section 80C (123) deduction for that reinvested interest each year, except in the final year, when the full maturity amount is paid out and that year’s interest isn’t reinvested. No TDS is deducted when your NSC matures; you receive the full maturity value.

How to Invest in NSC

NSC is purchased at any post office as a one-time lump sum, starting from ₹1,000 (in multiples of ₹100), with no upper limit. It’s open to resident individual Indians, including minors (through a guardian) and joint holders (up to three adults). Hindu Undivided Families (HUFs) and trusts cannot invest in NSC. It does not support monthly instalments the way a recurring deposit or SIP does; if you want to invest regularly, you’d buy a new certificate each time rather than add to an existing one.

Premature Withdrawal Rules

NSC cannot be withdrawn before its 5-year term except in three specific situations: the death of the certificate holder (or a joint holder), a court order directing withdrawal, or forfeiture by a Gazetted Government Officer if the certificate was pledged as loan collateral. There’s no provision for early withdrawal for financial hardship or medical emergencies. If you need liquidity before maturity, the standard route is a loan against your NSC; most banks accept it as collateral, letting you raise funds without breaking the investment.