NSC Calculator (National Savings Certificate)

How NSC interest works

The National Savings Certificate (NSC) VIII Issue is a five-year Post Office scheme. Interest compounds annually but is paid only at maturity together with the principal. Maturity value = principal × (1 + r)⁵, where r is the annual rate.

At 7.7% a year, a ₹1,00,000 certificate grows to 1,00,000 × 1.077⁵ ≈ ₹1,44,903 after five years, earning about ₹44,903. The government reviews small-savings rates every quarter, and the rate on the date you invest stays fixed for the whole term.

Tax treatment

The amount invested qualifies for deduction under Section 80C of the Income Tax Act, within the overall ₹1.5 lakh limit, under the old tax regime. Interest earned in each of the first four years is treated as reinvested and can itself be claimed under 80C; it is still taxable income, so declare it under income from other sources. The final year's interest is taxable and not reinvested. Unlike bank FDs, no TDS is deducted on NSC interest.

Who it suits

NSC suits conservative investors who want a guaranteed, government-backed return and an 80C deduction, and who will not need the money for five years. Premature withdrawal is allowed only in limited cases, such as the death of the holder or a court order. NSC can be pledged as collateral for a loan with banks.