NSC Calculator
Project your National Savings Certificate maturity — 7.7% compounded yearly for a fixed 5 years, with all interest paid together at maturity.
Year-wise NSC balance
| Year | Invested | Balance at year end |
|---|---|---|
| 1 | ₹1,00,000 | ₹1,07,700 |
| 2 | ₹1,00,000 | ₹1,15,993 |
| 3 | ₹1,00,000 | ₹1,24,924 |
| 4 | ₹1,00,000 | ₹1,34,544 |
| 5 | ₹1,00,000 | ₹1,44,903 |
What is the National Savings Certificate (NSC)?
The National Savings Certificate (NSC - VIII Issue) is a premier 5-year fixed income instrument backed by the Government of India and offered through the vast India Post network and authorized banks. Designed to encourage disciplined savings among mid-income taxpayers, NSC pairs sovereign safety with attractive tax deductions.
NSC currently carries an interest rate of 7.7% per annum, compounded annually but credited only at maturity. Deposits can be made from a minimum of ₹1,000 (in multiples of ₹100) with no upper ceiling on investment amounts.
Key Operational Rules: Reinvestment Advantage & Loan Collateral
NSC possesses two unique statutory advantages that distinguish it from standard bank fixed deposits:
- The Deemed Reinvestment Advantage: Interest earned in the 1st, 2nd, 3rd, and 4th years is not paid out; it is automatically added back to the principal. Under income tax rules, this accrued interest is deemed reinvested and qualifies for fresh tax deductions under Section 80C each year!
- Pledging as Bank Collateral: NSC certificates can be pledged or transferred to banks, NBFCs, or government bodies as formal security/collateral against business loans, housing loans, and working capital facilities.
- Complete Sovereign Backing: Like PPF and SCSS, NSC is 100% guaranteed by the Consolidated Fund of India, eliminating all credit and default risks.
The NSC Maturity & Compound Interest Formula
M = P × (1 + r)ⁿ
- M — Total maturity value received at the end of 5 years.
- P — Initial deposit amount.
- r — Declared annual interest rate (7.7% → 0.077).
- n — Tenure in years (fixed at exactly 5 years).
At 7.7% per annum compounded annually, every ₹1,000 deposited matures to ₹1,449.03 at the end of 5 years (a cumulative return of 44.9%).
A Worked Example: ₹1,00,000 Invested at 7.7% Over 5 Years
Case Study: Investing ₹1,00,000 in NSC at the current 7.7% rate:
- Initial Principal: ₹1,00,000
- Year 1 Accrued Interest (eligible for 80C): ₹7,700 (closing balance: ₹1,07,700)
- Year 2 Accrued Interest (eligible for 80C): ₹8,293 (closing balance: ₹1,15,993)
- Year 3 Accrued Interest (eligible for 80C): ₹8,931 (closing balance: ₹1,24,924)
- Year 4 Accrued Interest (eligible for 80C): ₹9,619 (closing balance: ₹1,34,543)
- Year 5 Accrued Interest (Taxable): ₹10,360
- Final Maturity Value: ₹1,44,903 (Total Interest: ₹44,903)
NSC Investment vs Maturity Projections at Statutory 7.7%
| Deposit Amount | Total Interest (5 Yrs) | Final Maturity Value | Effective 5-Yr Gain |
|---|---|---|---|
| ₹10,000 | ₹4,490 | ₹14,490 | 44.9% |
| ₹50,000 | ₹22,452 | ₹72,452 | 44.9% |
| ₹1,00,000 | ₹44,903 | ₹1,44,903 | 44.9% |
| ₹1,50,000 (80C Max) | ₹67,355 | ₹2,17,355 | 44.9% |
| ₹5,00,000 | ₹2,24,516 | ₹7,24,516 | 44.9% |
| ₹10,00,000 | ₹4,49,033 | ₹14,49,033 | 44.9% |
Values calculated using annual compounding at 7.7% p.a. NSC rates are fixed at the time of purchase for the entire 5-year tenure.
Tax Treatment: Section 80C Benefits & Zero TDS Advantage
NSC provides unique dual-stage tax advantages under the Income Tax Act:
- Initial Deposit Deduction: Up to ₹1,50,000 invested qualifies for Section 80C deduction under the Old Tax Regime.
- Accrued Interest Deduction: The interest accrued in the first 4 years is treated as reinvested under Section 80C, allowing you to claim deductions each year without investing fresh capital! Only the 5th year's interest cannot be reinvested and is taxed at your slab rate.
- Zero TDS: Unlike bank fixed deposits, no Tax Deducted at Source (TDS) is deducted by the post office or bank at the time of interest credit or maturity payout! You report the taxable interest in your annual ITR.
NSC questions, answered
Everything you need to know about interest rates, deemed 80C reinvestment, pledging, and premature encashment.
The current interest rate for the NSC (VIII Issue) is 7.7% per annum, compounded annually and payable at maturity. The rate locked in at the time of purchase remains fixed for the entire 5-year term.
Interest earned on NSC during the first 4 years is not paid out; it is added back to your balance. Because it is reinvested, the Income Tax Department allows you to claim this annual interest as a fresh Section 80C deduction each year within the ₹1.5 Lakh limit.
No. The post office or bank does not deduct any TDS (Tax Deducted at Source) on NSC interest or maturity payouts. However, the interest earned must be declared in your annual income tax return under "Income from Other Sources".
No. While the minimum investment is ₹1,000, there is no upper ceiling on the amount you can deposit in NSC. However, Section 80C tax deductions are capped at ₹1,50,000 per financial year.
Yes. NSC certificates can be officially pledged to commercial banks, cooperative societies, or government corporations as security for secured personal, business, or housing loans by submitting a pledge form at the issuing post office.
Premature encashment is strictly restricted and permitted only under three exceptional conditions: (1) on the death of the certificate holder; (2) on forfeiture by a pledgee (e.g., bank seizing loan collateral); or (3) when ordered by a court of law.
No. NRIs and Hindu Undivided Families (HUFs) are not eligible to invest in NSC. Only resident Indian individuals (singly or jointly up to 3 adults) and guardians on behalf of minors can purchase certificates.
Yes. If you have an active Department of Posts (India Post) savings bank account with internet or mobile banking enabled, you can purchase NSC certificates digitally through the e-Banking portal without visiting a branch.
NSC currently offers a higher rate (7.7% vs 6.5–7.0% for most bank FDs), features zero TDS, allows pledging for loans, and offers annual deemed 80C reinvestment. Bank tax-saving FDs cannot be pledged for loans and deduct 10% TDS under Section 194A.
Interest earned during the 5th (final) year is paid out along with the principal at maturity. Because it is not reinvested, it cannot be claimed under Section 80C and is fully taxable at your applicable income tax slab rate in the year of maturity.