National Savings Certificate (NSC) is a 5-year fixed-return savings scheme from India Post, currently paying 7.7% per annum compounded annually. The investment qualifies for 80C deduction up to ₹1.5 lakh, making it a popular tax-saving instrument with guaranteed returns.
What is NSC?
NSC has been around since the 1950s. You buy a certificate from any India Post office for any amount above ₹1,000 (no upper limit). After 5 years, you get back your principal plus compound interest.
The current rate (FY 2026 Q1) is 7.7% compounded annually. The interest is reinvested each year — so your effective annual return is the full 7.7%, not less. At maturity (5 years), you receive principal + 5 years of compounded interest.
Tax: NSC investment qualifies for ₹1.5 lakh deduction under Section 80C. The interest accrued each year (except the final year) is deemed reinvested and also qualifies for 80C — meaning only the last year's interest is fully taxable. Net tax benefit is significant for old-regime taxpayers.
Compound interest over 5 years
- Principal
- Investment—amount paid at purchase
- r
- Annual rate—currently 7.7%
How to use this calculator
Two inputs: investment amount and rate.
Enter investment amount
Minimum ₹1,000, no upper limit. ₹1.5 lakh maximises 80C.
Set the rate
7.7% is FY 2026 Q1 rate. Locked at purchase — your rate doesn't change with subsequent rate revisions.
When NSC makes sense
5-year 80C lock-in
When you want a fixed, predictable return + tax deduction, with a shorter lock-in than PPF.
Senior citizen's FD alternative
NSC pays similar to senior citizen FD rates but with 80C benefit. Useful for those still in tax-paying years.
Risk-free fixed return
Government-backed, no market risk. Pair with equity SIPs for the riskier wealth-building part.
Common mistakes to avoid
Forgetting to declare accrued interest each year
NSC interest is taxable annually on accrual, even though you receive it only at maturity. Declare it under 'income from other sources' each year AND claim the matching 80C reinvestment deduction — miss both and you overpay tax at maturity.
Comparing NSC's 7.7% directly with a bank FD's 7%
NSC compounds annually; bank FDs compound quarterly, so a 7% FD yields 7.19%. After the 80C benefit, NSC usually still wins for old-regime taxpayers — but run both numbers post-tax before choosing.
Buying NSC under the new tax regime for the 80C benefit
The new regime has no 80C deduction, which removes NSC's main edge. Under the new regime, compare it purely on rate against 5-year FDs and debt funds.
Glossary
- NSC
- National Savings Certificate — 5-year tax-saving Post Office scheme.
- Section 80C
- Tax deduction up to ₹1.5 lakh on specified investments. NSC qualifies.
- Deemed reinvestment
- Tax treatment where interest is treated as fresh investment for 80C purposes.