NSC

Full form: National Savings Certificate

Savings & Deposits

NSC is a Government of India savings certificate with 5-year tenure and guaranteed 7.7% annual interest (compounded annually, paid at maturity). Available at all post offices and major banks. Qualifies for Section 80C deduction.

In detail

Interest: compounded annually, paid as lump sum at maturity. Unique feature: interest earned each year (except year 5) is deemed reinvested and qualifies for 80C deduction automatically. Effectively, your 80C benefit compounds over 5 years.nnRs 1L invested in NSC:nYear 1: Rs 7,700 interest (80C eligible)nYear 2: Rs 8,293 interest (80C eligible)nYear 3: Rs 8,931 interest (80C eligible)nYear 4: Rs 9,619 interest (80C eligible)nYear 5: Rs 10,360 interest (taxable in maturity year)nMaturity value: Rs 1,44,903

Formula

NSC maturity = P x (1.077)^5nRs 1L: Rs 1L x 1.4490 = Rs 1,44,903

Real-life example

🇮🇳 India example

Priya invests Rs 50,000 in NSC. At 30% bracket: 80C saving = Rs 15,000 immediately. Over 5 years, interest deemed reinvested also gets 80C benefit each year = additional Rs 6,000 in tax savings. At maturity: Rs 72,451. Net effective investment: Rs 35,000 (after Rs 15K tax saving). Return on effective investment: 15.6% CAGR.

Frequently asked questions

NSC vs PPF -- which is better? ▼

PPF: 7.1%, 15-year lock-in, EEE status (maturity completely tax-free). NSC: 7.7%, 5-year, interest taxable at maturity. For long-term wealth: PPF (EEE) is better despite lower rate. For shorter 5-year goals and those who want higher guaranteed rate: NSC.