How NSC interest works
NSC (VIII Issue) runs for 5 years. Interest is compounded once a year but not paid out; you get everything at maturity. The rate is fixed on the day you invest and does not change for that certificate, even if later quarters change the rate for new buyers.
Maturity = deposit × (1 + 7.7%)5
₹1,00,000 invested today becomes ₹1,44,903 after 5 years. Every ₹1,000 becomes about ₹1,449.
| You invest | Interest in 5 years | Maturity value |
|---|---|---|
| ₹10,000 | ₹4,490 | ₹14,490 |
| ₹50,000 | ₹22,452 | ₹72,452 |
| ₹1,00,000 | ₹44,903 | ₹1,44,903 |
| ₹1,50,000 | ₹67,355 | ₹2,17,355 |
| ₹5,00,000 | ₹2,24,517 | ₹7,24,517 |
| ₹10,00,000 | ₹4,49,034 | ₹14,49,034 |
Tax
- Old regime: the deposit counts under 80C (up to ₹1.5 lakh with your other 80C items). The interest of years 1 to 4 is treated as reinvested, so it also counts under 80C and is effectively tax-free; you still show it as income.
- The 5th year’s interest is taxable at your slab.
- New regime: no 80C, so all the interest is taxed at your slab, in the year it accrues or at maturity.
Rules worth knowing
- Minimum ₹1,000, no upper limit. Buy at any post office, or online through India Post internet banking if you have a post office savings account.
- Premature closure only on the holder’s death, a court order, or forfeiture by a pledgee. You can pledge it as security for a loan.
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Questions people ask
What is the NSC interest rate now?
7.7% a year, compounded yearly, for Oct–Dec 2026. The rate you get stays fixed for the full 5 years.
What is the maturity value of ₹1 lakh in NSC?
₹1,44,903 after 5 years at 7.7%, so ₹44,903 of interest.
Can I withdraw NSC before 5 years?
Generally no. Early closure is allowed only on the death of the holder, a court order, or forfeiture by a pledgee.