NSC is one of the most straightforward government savings instruments. You walk into a Post Office, invest any amount (minimum ₹1,000), and get a certificate that matures in exactly 5 years. The current rate is 7.7% per annum (Q1 FY 2026–27), compounded annually. The interest is reinvested automatically — you receive the principal plus all accumulated interest only at the end of 5 years.
What makes NSC unique is that the annual interest (though not actually paid out) is considered to be reinvested, and you can claim this as an 80C deduction each year — reducing your taxable income every year for 4 years after your initial 80C claim at the time of investment.
NSC can be pledged as collateral security against loans from banks and housing finance companies — making it a useful instrument for both saving and borrowing.
- Any adult Indian resident individual — single account or joint (up to 3 adults)
- Minors above 10 years of age can hold in their own name
- A guardian can open on behalf of a minor or person of unsound mind
- HUFs and NRIs are NOT eligible to invest in NSC
At maturity (5 years): Visit the issuing Post Office with your NSC certificate/passbook and identity proof. The maturity amount is credited to your Post Office savings account or you receive a cheque/DD. NSC does not auto-renew — you must submit a renewal request or reinvest.
Premature withdrawal: NSC does not allow early withdrawal under normal circumstances. The only exceptions are death of the account holder, court orders, or forfeiture by a pledgee (in case of loan default).
The initial investment qualifies for Section 80C deduction up to ₹1.5 lakh under the old regime. Each year, the accrued interest (which is automatically reinvested) is also eligible for 80C deduction — effectively giving you 5 years of 80C claims from a single investment. At maturity, the entire interest paid out is taxable as per your income tax slab, but no TDS is deducted — you must declare it in your ITR.