National Savings Certificate

NSC rules, limits and figures at a glance

Rate as of 1 July 2026, from our small savings rate table.

What rate does NSC pay right now, and can it change?

The Ministry of Finance resets small savings rates every quarter. NSC has held at 7.7% for several consecutive quarters. The current figure is always published on the Department of Economic Affairs budget division page, and your post office will confirm it.

Here is the part that matters more than the rate itself. The rate is fixed at purchase for the full five years. A later cut does not touch a certificate you already hold.

That is not how PPF works. PPF pays whatever the current quarter’s rate is, on your whole balance, for fifteen years. So NSC and PPF respond to a falling rate cycle in opposite ways. If you expect rates to fall, locking 7.7% for five years has real value.

How much does ₹1,00,000 grow to in five years?

Interest is not paid out each year. It accumulates and comes to you at maturity, with the principal.

Our calculation, assuming 7.7% compounded annually: ₹1,00,000 becomes about ₹1,44,800 after five years. The gain is roughly ₹44,800. Check the exact maturity value on your certificate, because it is printed there and it is the number that binds.

Who NSC is wrong for

Start with the new tax regime. Section 80C is not available under it. Most salaried taxpayers are now defaulted into the new regime. For them NSC offers no deduction at all, and a 7.7% locked deposit competes badly. Our small finance bank FD table shows 8.00% available for general depositors, with far shorter tenures. Work through the old versus new regime choice before you buy anything for 80C.

Next, the 30% bracket. NSC interest is fully taxable. At a 31.2% effective rate, 7.7% nets about 5.3%. PPF pays 7.1% completely tax-free. So on after-tax return, PPF beats NSC by nearly two full percentage points for a high earner. NSC’s shorter lock-in is the only thing it wins on.

Finally, senior citizens. The Senior Citizen Savings Scheme paid 8.2% for the same July–September 2026 quarter, with quarterly payouts. If you are over 60, look at SCSS first.

The 80C trick most NSC buyers miss

NSC interest accrues each year but is not paid to you. It is treated as reinvested in the certificate. That reinvested interest itself qualifies for section 80C in the years before maturity.

So the practical handling is this. Declare each year’s accrued interest as income from other sources. Then claim the same amount under 80C, within the ₹1,50,000 overall cap. In years one to four the two entries largely cancel out.

Year five is different. That interest is paid out to you, so there is nothing left to reinvest and no deduction to claim. The whole final year’s interest is taxable. Plan for a tax bill in the year the certificate matures. Our section 80C guide covers what else competes for the same ₹1,50,000.

What happens if you need the money before five years?

You generally cannot have it. NSC is a five-year lock, and the scheme rules permit premature encashment only in a short list of circumstances. Ask your post office for that list in writing before you commit money you might need.

That makes NSC a poor emergency fund. A five-year tax-saver FD has the same problem, and for the same reason. Keep your buffer somewhere you can reach it.