The National Savings Certificate (NSC) is one of the most straightforward government-backed savings instruments in India — a fixed 5-year investment with guaranteed returns and a genuinely useful tax benefit most people don’t fully understand.
[Use the NSC Calculator above ↑] — enter your investment amount to see your exact maturity value, year by year.
The NSC interest rate for FY 2026-27 is 7.7% per annum, compounded annually. Whatever rate applies when you purchase your certificate is locked in for the entire 5-year tenure — future quarterly rate revisions won’t affect certificates you’ve already bought.
NSC has a genuinely distinctive tax structure that trips up a lot of first-time investors:
No TDS is deducted on NSC interest at any point — you’re responsible for reporting the accrued interest in your tax return each year, even though you don’t actually receive the cash until maturity.
NSC is not designed for early exit. Premature closure is generally only allowed in specific circumstances — death of the certificate holder, forfeiture by a pledgee, or by court order. If withdrawn within the first year, no interest is paid at all. Between one year and maturity, interest is paid at the lower Post Office Savings Account rate instead of the NSC rate — a real penalty for breaking the 5-year commitment early.
| Feature | NSC | PPF | Bank FD |
|---|---|---|---|
| Current rate | 7.7% | 7.1% | ~6.5-7.5% (varies) |
| Tenure | 5 years (fixed) | 15 years (extendable) | Flexible |
| Interest taxable? | Yes (except reinvested portion) | No — fully tax-free (EEE) | Yes, fully |
| 80C benefit | Yes, including reinvested interest | Yes | Only on 5-year tax-saver FDs |
| Can be used as loan collateral | Yes | Limited | Yes |
NSC’s 5-year tenure sits neatly between a typical FD and PPF’s 15-year commitment — useful if you want a tax-saving instrument without locking money away as long as PPF requires. See our PPF calculator and FD rates guide to compare directly.
What is the current NSC interest rate?
7.7% per annum for FY 2026-27, compounded annually and locked in for your full 5-year tenure.
Is NSC interest tax-free?
No — interest is taxable each year as it accrues, though interest from Years 1-4 qualifies for a fresh Section 80C deduction since it’s treated as reinvested. Only Year 5’s interest has no offsetting deduction.
Can NRIs invest in NSC?
No — NSC is restricted to resident individuals and Hindu Undivided Families (HUFs).
Can I withdraw my NSC before 5 years?
Only in specific circumstances (death, court order, or pledgee forfeiture). If you withdraw between 1 year and maturity under an allowed circumstance, you receive the lower Post Office Savings Account rate instead of the NSC rate.
See also our SCSS calculator and RD calculator for more government-backed savings comparisons.
