National Savings Certificate (NSC VIII Issue): all the rules
Tap a heading to expand it. Rules checked on 7 October 2026.
Who can invest
- An adult for themselves, a guardian on behalf of a minor or a person of unsound mind, or a minor aged 10 or above in their own name.
- Jointly by up to three adults: Joint A (paid to all holders together, or the survivors) or Joint B (paid to any holder, or the survivors).
- Only individuals can invest — HUFs and trusts cannot.
Investment
- Minimum ₹1,000, in multiples of ₹100. There is no maximum, and you can buy any number of certificates.
Interest and maturity
- NSC matures 5 years from the date of deposit. The rate on the day you buy is fixed for the full term.
- Interest is compounded yearly and paid only at maturity, together with your investment. A certificate of yearly interest accrued is available on request.
Closing early
- NSC cannot be cashed before maturity except: on the death of the holder (or any joint holder); on forfeiture by a pledgee who is a Gazetted Officer; or on a court order.
- In those cases: within the first year, only your investment is returned; from 1 to 3 years, simple interest at the Post Office Savings Account rate (currently 4%) is added; after 3 years, a reduced value set by the government applies.
Transfer, pledge and death
- It can be pledged as security for a loan with the President or a State Governor, the RBI, a scheduled or co-operative bank, a public or private corporation or government company, a local authority, or an approved housing finance company.
- It can be transferred to another person only: to the nominee or legal heirs on the holder's death; to the surviving holders when a joint holder dies; on a court order; or when pledged as security.
- On the holder's death, up to three surviving nominees or legal heirs can choose to continue it until maturity as if it were their own, or close it.
Tax
- The investment qualifies for a deduction under Section 123 of the Income-tax Act, 2025 (the old Section 80C), up to ₹1,50,000 a year in total across all eligible investments. This deduction is available only if you choose the old tax regime; the new (default) regime under Section 202 does not allow it.
- Interest is taxable. Interest for years 1 to 4 is treated as reinvested, so it also qualifies for the deduction (old regime). Interest for year 5 is taxable with no deduction.
- The post office generally does not deduct TDS on NSC interest, so declare it yourself in your return.
Sources
- The Gazette of India — G.S.R. 919(E), 12 December 2019: National Savings Certificates (VIII Issue) Scheme, 2019
- Income-tax Act, 2025 as amended by the Finance Act, 2026 — Sections 123, 153, 202, 393 and Schedules II and XV
- Small savings interest rates, October–December 2026 — CAclubindia
Rules can change. Always confirm with your post office or bank before investing.
How NSC maturity is calculated
Interest is compounded once a year and paid with your investment at the end:
Maturity = amount × (1 + rate)5
Example:₹1,00,000 at 7.7% grows to ₹1,44,903 after 5 years — ₹44,903 of interest.
Frequently asked questions
What is the NSC interest rate now?
7.7% a year for Oct–Dec 2026. The rate on the day you buy is fixed for all 5 years.
How does NSC save tax every year?
Under the old tax regime, the amount you invest qualifies for a deduction under Section 123 of the Income-tax Act, 2025 (the old Section 80C). Interest for years 1 to 4 is treated as reinvested, so it qualifies too: on ₹1,00,000 at 7.7%, that is ₹7,700, ₹8,293, ₹8,931, ₹9,619 in years 1 to 4. Interest for year 5 is taxable with no deduction.
Can I cash an NSC before 5 years?
Only in three cases: the death of the holder (or a joint holder), forfeiture by a pledgee who is a Gazetted Officer, or a court order. Otherwise the money stays in for the full term.
Is NSC interest taxable?
Yes, at your slab rate. The post office generally does not deduct TDS on NSC, so declare the interest yourself in your return.
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Last updated . For information only — not financial advice. Check the final figures with your lender or bank.