NSC at a glance
| Interest rate | 7.7% a year (October–December 2026), compounded yearly, fixed for the term |
|---|---|
| Deposit | ₹1,000 minimum, in multiples of ₹100; no maximum |
| Term | 5 years; paid in one sum at maturity |
| Who can buy | Resident adults, singly or jointly (up to three); a guardian for a minor; a minor of 10 or more |
| Tax | Deposit and reinvested interest under 80C (old regime); interest taxable |
| Early exit | Only on death, forfeiture by a pledgee, or a court order |
| Loan | Can be pledged as security with banks and other lenders |
| Where to buy | Any post office |
Worked example: ₹1 lakh and ₹1.5 lakh
| Year | Interest earned (₹1 lakh) | Value (₹1 lakh) | Value (₹1.5 lakh) |
|---|---|---|---|
| Year 1 | ₹7,700 | ₹1,07,700 | ₹1,61,550 |
| Year 2 | ₹8,293 | ₹1,15,993 | ₹1,73,989 |
| Year 3 | ₹8,931 | ₹1,24,924 | ₹1,87,387 |
| Year 4 | ₹9,619 | ₹1,34,544 | ₹2,01,815 |
| Year 5 | ₹10,360 | ₹1,44,903 | ₹2,17,355 |
At 7.7% a year. Check other amounts with the NSC calculator.
How NSC is taxed
Under the old regime the amount you invest counts towards Section 80C (now Section 123 of the Income-tax Act, 2025), up to ₹1.5 lakh a year shared with PPF, EPF and the rest. Each year’s interest is taxable, but for years 1 to 4 it is treated as reinvested in the certificate, so you can claim it under 80C as well. In year 5 the interest is paid out, not reinvested, and is simply taxed.
Under the new regime there is no deduction and all the interest is taxed at your slab rate. Either way no TDS is deducted, so declare the interest in your return each year (or all in year 5 if you prefer, as long as you are consistent).
Encashment, transfer and loans
NSC cannot be cashed before five years except on the death of a holder (or any holder in a joint certificate), when a bank or other lender that holds it as security forfeits it, or on a court order. It can be pledged as security for a loan, and moved from one post office to another. At maturity the full value is paid into your post office savings account or by cheque.
How to buy NSC
At a post office, fill in the application with your Aadhaar, PAN and a photograph, and pay the amount; you receive the certificate in electronic form, recorded in a passbook. India Post internet banking also lets savings account holders buy NSC online. Name a nominee when you buy it.
NSC compared with the alternatives
- The 5-year post office time deposit pays 7.5% with the same 80C benefit, but its interest is paid out every year and does not count for 80C.
- PPF pays 7.1% with tax-free interest, but locks your money in for 15 years.
- Tax-saving bank FDs also lock in for 5 years; compare on bank FD rates.
- Kisan Vikas Patra pays 7.5% with no 80C deduction, but can be cashed after 2½ years.
Frequently asked questions
What is the NSC interest rate for October–December 2026?
7.7% a year, compounded yearly and paid with the deposit after 5 years. The rate when you buy the certificate is fixed for its whole term.
What will ₹1 lakh in NSC become after 5 years?
₹1,44,903 at 7.7%, of which ₹44,903 is interest.
Is NSC interest taxable?
Yes, at your slab rate. Under the old regime, though, the interest for the first four years is treated as reinvested and can be claimed under Section 80C along with the deposit, so in practice most of it escapes tax until the last year.
Can NSC be withdrawn before 5 years?
Only on the death of a holder, when a bank or other pledgee forfeits it, or on a court order. Otherwise the money is locked in for the full five years.
Is there a maximum limit for NSC?
No. The minimum is ₹1,000, in multiples of ₹100, and you can invest any amount, though only ₹1.5 lakh a year counts towards Section 80C.
Can I take a loan against NSC?
Yes. NSC can be pledged with a bank, NBFC or housing finance company as security for a loan.
Sources
- National Savings Institute – National Savings Certificate (VIII issue)
- Department of Economic Affairs – small savings interest rates
- India Post – savings schemes
Last checked on 6 October 2026. The rate for new certificates is reviewed every quarter; a certificate keeps the rate it was bought at.