How to interpret your result
The Maturity Value compounds annually over the fixed 5-year tenure, even though NSC doesn't pay out interest until maturity — the interest is deemed reinvested each year and is itself 80C-eligible in years 1–4 (only the final year's interest is not, since it's paid out at maturity rather than reinvested).
Unlike PPF, NSC interest is fully taxable at your slab rate — there's no tax-free status on the interest component, only the reinvested-and-deducted treatment described above. Factor that into your actual post-tax return, which will be meaningfully lower than the headline maturity figure suggests once you account for tax on the interest.
NSC has no premature withdrawal option except in specific cases (holder's death, court order) — the 5-year figure shown here isn't a flexible estimate, it's a fixed commitment.
NSC: the guaranteed 5-year 80C investment
The National Savings Certificate is a Post Office scheme with a government guarantee — your principal and a fixed return of 7.7% p.a. are fully secured. No market risk, no exit before 5 years.
NSC vs. other 80C instruments (2025)
See the comparison above for how NSC stacks up against other 80C instruments on rate, tenure, and tax treatment.
NSC is ideal for conservative investors who want guaranteed returns with 80C benefit and can lock money for 5 years.
NSC interest: the reinvestment quirk
NSC doesn't pay annual interest — it's compounded and paid at maturity. But each year's interest accrual is deemed a reinvestment into NSC, so it qualifies for 80C deduction in years 1–4. Only the 5th year's interest is fully taxable at maturity.
Example: ₹1 lakh invested at 7.7% over 5 years:
- Maturity value: ~₹1,44,903
- Total interest: ~₹44,903
- Year 5 interest (~₹10,470): taxable at your slab rate
- Net effective return after 30% tax on year 5 interest: ~7.2%
How to buy NSC
NSC can be purchased at:
- Any post office branch (walk-in with PAN + Aadhaar)
- India Post Payments Bank app (digital)
- DOP Internet Banking portal