NSC Interest Rate 2026 - Check National Savings Schemes Rates

Introduction

The National Savings Certificate (NSC) is a trusted and government-backed savings instrument widely used by investors in India who want secure, fixed income returns over a medium-term period. It offers a dependable way to grow savings with compounding without market risk, making it especially useful for risk-averse investors and those planning tax-efficient investments. In 2026, the NSC continues with consistent interest rate trends set by the Government of India, allowing individuals to plan their finances clearly and confidently.

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What Is a National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a fixed-income investment option offered by the Government of India through post offices and authorized financial institutions. It is designed to encourage savings among individuals with the added advantage of tax benefits under Section 80C of the Income Tax Act. NSC has a fixed tenure and pays interest on maturity after compounding annually.

NSC Interest Rate 2026, Latest Update

The interest rate on NSC is revised quarterly by the Government of India based on prevailing economic conditions and yields on government securities. According to the latest government notification for the January–March 2026 quarter, the NSC interest rate remains unchanged at:
🔹 7.7% per annum (compounded annually and payable at maturity)

Quarterly NSC Interest Rate Overview (FY 2025–26)

Quarter

NSC Interest Rate (p.a.)

Apr–Jun 2025

7.7%

Jul–Sep 2025

7.7%

Oct–Dec 2025

7.7%

Jan–Mar 2026

7.7%

This stable rate reflects the government’s emphasis on providing predictable and secure returns for NSC investors.

How NSC Interest Is Calculated

NSC interest is compounded annually, meaning each year’s interest gets added to the principal for the next year’s calculation. However, interest is paid only at maturity (at the end of the tenure).

Simple Calculation Example

If you invest ₹1,00,000 in NSC at 7.7% interest, after 5 years, the maturity amount would grow based on compounded interest using the formula:
Maturity Value = Principal × (1 + Interest Rate)^n
Here, n = number of years (5)

This compounding feature helps NSC deliver higher effective returns compared with simple interest instruments.

Key Features of NSC

Here’s a simple breakdown of what makes NSC an attractive choice:

Feature

Description

Interest Rate

7.7% p.a., compounded annually and paid at maturity

Tenure

5 years (fixed)

Investment Minimum

₹1,000 and in multiples thereof

Maximum Limit

No upper limit for investment (only ₹1.5 lakh eligible for Section 80C tax deduction)

Interest Payment

At maturity only

Security

Backed by the Government of India

Eligibility to Invest in NSC

NSC can be invested in by:

• Individuals who are residents of India.
• Hindu Undivided Families (HUFs).
• Minors through parents or legal guardians.

Note: Non-Resident Indians (NRIs) are not eligible to open or hold NSC accounts.

Tax Benefits and Treatment

Tax Deduction (Section 80C):

Investment made in NSC qualifies for tax deduction under Section 80C of the Income Tax Act, up to a limit of ₹1.5 lakh per year. Interest re-invested in subsequent years also qualifies for deduction under this section.

Tax on Interest:

Interest earned on NSC is taxable. Since interest is compounded annually and added to the principal, the accrued interest becomes part of your taxable income each year though it is paid only at maturity.

TDS:

There is no Tax Deducted at Source (TDS) on interest earned in NSC.

Lock-in and Withdrawal Rules

NSC investment carries a 5-year lock-in, which means:

• Premature withdrawal is generally not permitted before completing five years.
• Exceptions may be allowed only in case of the investor’s demise or under specific guidelines issued by the government.

The lock-in fosters disciplined savings and ensures investors remain committed to long-term financial goals.

Benefits of Investing in NSC

1. Guaranteed Returns:

Being government-backed, NSC offers assured returns with near-zero default risk.

2. Compound Growth:

Since interest compounds annually, your investment grows at a faster rate compared to simple interest options.

3. Tax Savings:

Eligible for deductions under Section 80C, helping reduce taxable income.

4. Accessibility:

NSC can be easily opened at any post office branch or authorized bank.

5.No Upper Limit:

Although tax deduction eligibility is capped, you can invest any amount above ₹1,000 if it suits your financial plan.

How NSC Fits in Financial Planning

NSC works well in a diversified investment strategy if you want:

• A medium-term savings tool with predictable returns.
• A portion of your portfolio that is risk-free and government-guaranteed.
• A way to lock in tax benefits while planning for goals like education, a home purchase, or financial security.

Because the interest is fixed and known upfront, it aids in long-term planning without surprises.

NSC vs Simple Bank Savings

Although NSC offers a fixed interest around 7.7%, this is often higher than traditional savings accounts or regular fixed deposits. The government’s periodic review ensures rates stay competitive relative to market conditions.

Example: NSC Returns Over 5 Years

Here’s how a typical NSC investment grows:

Year

Effective Value at Year-End*

1

Principal × 1.077

2

Previous balance × 1.077

3

Previous balance × 1.077

4

Previous balance × 1.077

5

Final maturity value

Interest compounds annually but is paid at the end.

This steadily increasing value illustrates the impact of compound interest on long-term savings.

Conclusion

The National Savings Certificate (NSC) remains a reliable and secure government-backed investment instrument for individuals who want fixed returns with tax benefits and capital safety in 2026. With an interest rate of around 7.7% per annum, compounded annually and paid at maturity, NSC suits investors seeking predictable growth over a 5-year lock-in period. Understanding how interest accrues, eligibility criteria, tax implications, and withdrawal rules will help you make informed decisions and effectively include NSC in your financial planning.