What is the NSC tenure?

Current NSC (VIII Issue) has a 5-year tenure.

Can I encash NSC before 5 years?

Premature encashment is very restricted (death, court order, forfeiture by pledge).

National Savings Certificate Calculator (NSC)

Q: Is NSC interest tax free?

No. Interest is taxable; however, the first four years' deemed reinvested interest can be claimed under Section 80C within the overall limit.

Calculate maturity value and interest earned on a 5-year NSC investment (compounded annually).

National Savings Certificate (NSC) – Complete Guide

National Savings Certificate (NSC) is a 5‑year, government backed small savings instrument offering assured returns with Section 80C tax deduction (on amount invested). Interest is compounded annually and paid at maturity (no interim payout).

Key Features

Tenure: 5 years (NSC VIII Issue).
Compounding: Annual compounding; interest of earlier years is deemed reinvested.
Minimum / Denominations: Small starting amount with standard certificate denominations.
Collateral Use: Can be pledged to banks for loans.

Tax Treatment Nuances

80C Benefit: Principal invested qualifies (subject to ₹1.5 lakh aggregate slab).
Interest: Deemed reinvested for first 4 years, so that portion can also be claimed under 80C (if within the limit) when you opt to show it.
Maturity Year: Final year interest becomes taxable (not reinvested).

Formula Used

Maturity = P × (1 + r)^t
Total Interest = Maturity − P
Effective Annual Yield = ((Maturity/P)^(1/t) - 1)

Illustrative Accrual (₹10,000 @ 7.7%)

Year	Opening	Interest	Closing
1	10,000	770	10,770
2	10,770	829	11,599
3	11,599	893	12,492
4	12,492	962	13,454
5	13,454	1,036	14,490

(Rounded values for illustration.)

NSC vs KVP vs SCSS

Scheme	Tenure	Tax Benefit	Payout	Target User
NSC	5 yrs	80C on invest (+ deemed interest)	Maturity lump sum	Tax saver fixed return
KVP	~115 months	None	Maturity	Assured doubling
SCSS	5 yrs (extendable)	80C (principal)	Quarterly interest	Senior income

Premature Closure

Not permitted before 1 year; after that, forfeiture/penalty rules apply (as per latest notification).
Pledging does not break compounding; interest accrues till maturity.

Planning Tips

Stagger multiple NSCs quarterly to create a maturity ladder from year 5 onwards.
Track deemed interest yearly if you plan to claim 80C on reinvested portions.
Compare post-tax yield with debt mutual fund (indexation) for large allocations.

FAQs

Can I withdraw NSC early? Only under limited circumstances (death / court order / pledge invocation).

Is NSC interest tax free? No. Only the principal investment qualifies for 80C; interest is taxable (except deemed reinvested years can be claimed as 80C within limit).

Can I buy NSC online? Through India Post internet banking (where enabled) or by visiting a post office.

Explore related tools: KVP Calculator, SCSS Calculator, PPF Calculator.