Beginner guide · 4-minute read
NSC, explained simply
The National Savings Certificate (NSC) is a 5-year government savings certificate. Interest is added every year and paid with your money at the end.
Checked on 14 Oct 2026 against the Ministry of Finance small savings rate notice for Oct–Dec 2026.
In one minute
- Who runs it
- The Government of India, through post offices and some banks.
- What it pays
- 7.7% a year (Oct–Dec 2026), fixed for the 5 years once you buy.
- How long
- 5 years.
- How much
- From ₹1,000, with no upper limit.
How it works, with real numbers
Buy NSC worth ₹1,00,000 and after 5 years you get ₹1,44,903.
The interest is taxable each year at your slab rate (about ₹14,010 in all at 30%). Under the old regime, though, each year's interest except the last counts as a fresh investment for the ₹1.5 lakh deduction, which can offset much of that tax.
How the NSC rate has changed
NSC pays 7.7% today, unchanged since April 2023. Since it began in May 1989, it has ranged from 6.8% (2020–2022) to 12% (1989–1998).
- The rate on the day you invest stays fixed for your whole term. Later changes, up or down, don't affect money you've already put in.
- Rates were higher in the 1980s and 1990s, when prices were also rising faster. What counts is how far the rate stays ahead of inflation (5.54% now).
See every rate change (19)
| Period | Rate a year |
|---|---|
| Apr 2023 – now | 7.7% |
| Jan 2023 – Mar 2023 | 7% |
| Apr 2020 – Dec 2022 | 6.8% |
| Jul 2019 – Mar 2020 | 7.9% |
| Oct 2018 – Jun 2019 | 8% |
| Jan 2018 – Sep 2018 | 7.6% |
| Jul 2017 – Dec 2017 | 7.8% |
| Apr 2017 – Jun 2017 | 7.9% |
| Oct 2016 – Mar 2017 | 8% |
| Apr 2016 – Sep 2016 | 8.1% |
| Apr 2013 – Mar 2016 | 8.5% |
| Apr 2012 – Mar 2013 | 8.6% |
| Dec 2011 – Mar 2012 | 8.4% |
| Mar 2003 – Nov 2011 | 8% |
| Mar 2002 – Feb 2003 | 9% |
| Mar 2001 – Feb 2002 | 9.5% |
| Jan 2000 – Feb 2001 | 11% |
| Jan 1999 – Jan 2000 | 11.5% |
| May 1989 – Dec 1998 | 12% |
Source: National Savings Institute, Ministry of Finance, rates since launch; Oct–Dec 2026 from the Ministry's latest notice.
Pros and cons
Good things
- Government-backed. As safe as it gets in India.
- Rate locked for 5 years. Later rate cuts don't affect your certificate.
- Double tax deduction (old regime). The amount you invest and the yearly interest both count towards ₹1.5 lakh.
- No upper limit. Useful for larger amounts.
- Can back a loan. Banks accept NSC as security.
Things to watch
- Locked for 5 years. Early exit is only allowed in rare cases, such as the holder's death.
- Interest is taxable. At your slab rate, even though it's paid only at the end.
- No regular income. Everything comes at maturity.
- Trails inflation at a high slab. At 30%, it works out to 5.30% a year after tax, around today's 5.54% inflation.
Is it right for you?
Mistakes to avoid
- Not declaring the yearly interest. It's taxable every year; declare it (and claim the deduction on it under the old regime).
- Buying it for money you may need soon. You can't cash it early.
How to start
- Visit a post office (or buy online if you have a Post Office savings account).
- Complete KYC with PAN and Aadhaar.
- Pay the amount and add a nominee.
- Keep the certificate details safe.
Words you'll see
- Certificate
- The record of your NSC holding, now usually electronic.
- Reinvested interest
- Interest added to the certificate instead of being paid out.
- Pledge
- Using the certificate as security for a loan.
This guide explains how things work. It is not advice on what you should invest in. NetReturns is not SEBI-registered.