NSC — maturity and the accrual trick

The certificate that pays nothing until year five but is taxed every year — and gives most of that tax back through 80C in the old regime.

Amount invested (₹) — minimum ₹1,000, no maximum

The rules this tool applies

Rate 7.7% for certificates bought in July–September 2026, fixed for the full 5 years; compounded annually, paid at maturity.
Accrual taxation: each year's interest is taxable that year under "other sources" even though you receive nothing — declare it in the ITR.
80C on reinvested interest: the interest of years 1–4 is deemed reinvested and counts toward the ₹1.5 lakh 80C limit (now s.123) — old regime only. Year-5 interest is paid out, so no deduction. The initial deposit also qualifies.
No TDS on NSC — nothing shows in 26AS; it is on you to report the interest.
Lock-in: 5 years; premature encashment only on death, forfeiture by a pledgee, or court order. Can be pledged as loan collateral.

Worked example

₹1,00,000 in NSC: year-1 interest ₹7,700, year-5 ₹10,360; maturity ₹1,44,903. Total interest ₹44,903, of which ₹34,544 (years 1–4) can be claimed under 80C in the old regime; the year-5 ₹10,360 is simply taxable.

Edge cases to know

New-regime holders get no 80C — NSC is then a plain 7.7% taxable instrument, comparable with a 5-year FD (7.5% at the post office).
Joint and minor accounts allowed; a certificate can be transferred once to another person.
Reporting choice: some taxpayers report all interest at maturity (cash basis) — the accrual method is the safer, department-preferred one.

Related tools

FD / RD calculator — the bank comparison.
PPF calculator — tax-free alternative at 7.1%.
Regime comparator.

Last verified: 18 September 2026 — Rate 7.7% per MoF (30 June 2026); accrual and 80C treatment per CBDT Circular 405 practice, s.123 of the Income-tax Act 2025. Rates: Ministry of Finance notification of 30 June 2026 for July–September 2026 (ninth unchanged quarter); re-checked quarterly. · Not tax advice.