NSC Investment — National Savings Certificate Interest Rate & Tax Benefits 2026

Updated: 3 June 2026 | Q1 FY 2026-27 rate (Apr–Jun 2026) | Ministry of Finance notification

NSC (National Savings Certificate) is a government-backed fixed income savings scheme offering 7.7% per annum interest for Q1 FY 2026-27 (April–June 2026). Minimum investment is ₹1,000 with no upper limit. The 5-year lock-in means premature withdrawal is generally not allowed. The principal invested qualifies for Section 80C deduction up to ₹1.5 lakh under the old regime. NSC certificates are available at all post offices and authorised banks across India.

7.7% p.a.

NSC interest rate — Q1 FY 2026-27 (April–June 2026)
Risk-free, government-backed. 80C eligible (old regime). 5-year lock-in. Interest compounded annually, paid at maturity. No TDS deducted.

NSC Key Details at a Glance

Parameter	Details
Interest Rate (Q1 FY 2026-27)	7.7% per annum (compounded annually, paid at maturity)
Minimum Investment	₹1,000 (in multiples of ₹100 thereafter)
Maximum Investment	No upper limit
Tenure	5 years (no premature withdrawal except on death or court order)
Section 80C Eligibility	Yes — principal investment eligible under old regime (up to ₹1.5L combined limit)
Interest Taxability	Annual accrued interest is taxable; but Years 1–4 reinvested interest qualifies for 80C deduction
TDS on Interest	No TDS. Declare accrued interest in ITR each year under "Other Sources".
Available at	All post offices (India Post) and authorised banks
Online Purchase	Yes — via India Post eNSC portal and IPPB
Nomination Facility	Available
Joint Holding	Up to 3 adults (joint A or joint B type accounts)

How NSC Interest Works — 80C on Reinvested Interest

NSC interest is compounded annually but not paid out annually — the entire interest accumulates and is paid together with the principal at the end of 5 years. This creates a useful tax planning opportunity:

Year	Accrued Interest (₹1L invested @ 7.7%)	Taxable in that Year?	80C Deduction Available?
Year 1	₹7,700	Yes — declare in ITR	Yes — 80C offset available
Year 2	₹8,293	Yes — declare in ITR	Yes — 80C offset available
Year 3	₹8,932	Yes — declare in ITR	Yes — 80C offset available
Year 4	₹9,619	Yes — declare in ITR	Yes — 80C offset available
Year 5 (Maturity)	₹10,359	Yes — declare in ITR	No — not reinvested
Total maturity value on ₹1,00,000		₹1,44,903

Net tax effect: For years 1–4, the interest is taxable but the 80C deduction on the deemed reinvestment effectively neutralises the tax impact for most investors within the ₹1.5L 80C limit. In year 5, the maturity interest is taxable without any 80C offset.

NSC vs PPF — Which Is Better?

NSC (National Savings Certificate)

Interest rate 7.7% p.a.
Lock-in period 5 years
Interest taxability Taxable (ETE)
TDS No TDS
80C on principal Yes
80C on interest Yr 1–4 only
Max investment No limit
Loan facility Yes (pledge)

PPF (Public Provident Fund)

Interest rate 7.1% p.a.
Lock-in period 15 years
Interest taxability Tax-free (EEE)
TDS No TDS
80C on principal Yes
80C on interest N/A (tax-free)
Max investment ₹1.5L/year
Loan facility Partial (yr 3–6)

Verdict: PPF offers tax-free returns (EEE — Exempt-Exempt-Exempt) making it superior for long-term wealth building, especially for those in higher tax brackets. NSC offers higher rate, shorter lock-in, and no annual investment cap — better for medium-term goals or when 80C limit is already nearly exhausted by other instruments.

How to Invest in NSC — Step by Step

Visit your nearest post office or the India Post eNSC portal (indiapost.gov.in) for online purchase.
Carry KYC documents: Aadhaar card and PAN card (mandatory). Passport photo for physical application.
Fill the NSC-VIII application form (available at the post office or downloadable online).
Pay the investment amount by cash, cheque, or online transfer. Minimum ₹1,000.
Receive the NSC certificate — physical passbook/certificate at post office, or e-certificate credited to your India Post account for online purchases.
Keep the certificate safe for Section 80C proof and ITR declaration. Note the maturity date (5 years from date of purchase).

Frequently Asked Questions

Is NSC interest taxable every year?

Yes. Even though NSC interest is paid only at maturity, the annual accrued interest is taxable as "Income from Other Sources" and must be declared each year. However, for years 1–4, the same accrued interest is deemed to be reinvested and qualifies as a fresh Section 80C investment — so you effectively get an 80C deduction offsetting the taxable interest. The year 5 maturity interest is taxable but no 80C offset is available.

Can NSC be pledged for a bank loan?

Yes. NSC certificates (physical or e-NSC) can be pledged as collateral for loans from banks and NBFCs. The post office endorses the pledge on the certificate/e-certificate. Most banks accept NSC at close to face value as collateral, and the loan interest is typically lower than personal loan rates.

Can I buy NSC online without visiting a post office?

Yes. NSC can be purchased online via the India Post eNSC portal (indiapost.gov.in) using net banking or through an India Post Payments Bank (IPPB) account. An e-NSC (electronic certificate) is issued to your account. Physical certificates remain available at post offices for those who prefer them.

What happens when NSC matures after 5 years?

Take your NSC certificate (or login to the eNSC portal) along with your identity proof to the post office. You receive the principal plus compound interest in full. You can either reinvest for a fresh 5-year NSC, transfer to savings/bank, or use the proceeds as needed. There is no automatic rollover — you must initiate reinvestment.

Is NSC better than a 5-year tax-saving bank FD?

NSC currently offers 7.7% p.a. vs. most bank tax-saving FDs at 6.5–7.5%. NSC has no TDS — you self-declare interest in ITR. Bank FDs are subject to TDS at 10% (or 20% without PAN). NSC interest compounds annually, while FDs may offer quarterly/monthly compounding. For taxpayers in the 30% bracket, NSC's no-TDS advantage and slightly higher rate make it generally better. However, bank FDs offer deposit insurance up to ₹5 lakh per bank.

Section 80C Deductions Income Tax Calculator Old vs New Tax Regime ITR Filing Due Date

Declare NSC Interest Correctly & File ITR

NSC interest must be declared annually in ITR. Our CA team ensures correct reporting, 80C claims, and full compliance — from ₹999.

File ITR with TaxClue →

◆ Available in 71 Cities

Nsc Investment Near You

Expert CA/CS assistance for nsc investment across India. Click your city for local details.

→ New Delhi → Mumbai → Bengaluru (Bangalore) → Hyderabad → Chennai → Kolkata → Pune → Ahmedabad → Noida (UP) → Gurgaon (Gurugram) → Jaipur → Lucknow → Chandigarh → Surat → Kochi (Cochin) → Faridabad → Ghaziabad → Greater Noida → Panipat → Sonipat → Manesar (IMT) → Dharuhera → Mathura → Palwal → Agra → Kosi Kalan → Aligarh → Khair → Jewar (Noida International Airport) → Kanpur → Varanasi (Kashi) → Prayagraj (Allahabad) → Meerut → Bareilly → Moradabad → Gorakhpur → Firozabad → Saharanpur → Muzaffarnagar → Bulandshahr → Hapur → Karnal → Kurukshetra → Ambala → Hisar → Rohtak → Yamunanagar → Rewari → Bhiwani → Jodhpur → Udaipur → Kota → Ajmer → Bikaner → Ludhiana → Amritsar → Jalandhar → Patiala → Mohali (SAS Nagar) → Bathinda → Dehradun → Haridwar → Rudrapur → Shimla → Solan (Baddi-Barotiwala-Nalagarh) → Bhopal → Indore → Gwalior → Jammu → Srinagar → Panchkula

Ask Veda