How to Calculate NSC Interest

Individuals who invest in the National Savings Certificate (NSC) scheme can easily calculate the amount of money they will receive at maturity. Individuals can enter basic details and find out the maturity amount by using various online calculators.

NSC Interest Rate

Recently, the NSC rate of interest has been reduced from 7.9% to 6.8%. (w.e.f. 1 April 2020) and the interest is compounded on a yearly basis. However, the interest amount is payable only at the time of maturity. The Government of India decides the rate of interest and revises it on a quarterly basis. The interest that is generated gets reinvested automatically. However, the returns that are generated will not beat inflation.

Calculation of Interest

In case individuals are calculating the interest online, the below-mentioned details must be entered in the NSC calculator:

  • The date when the certificate was purchased.
  • The amount that has been invested in the scheme.

The rate of interest will be filled automatically depending on when the certificate was purchased.

Given in the table below is an example of how interest is calculated, and the amount individuals will receive at the time of NSC maturity:


Investment: Rs.1,00,000

Date of Purchase: 1 July 2019

Rate of Interest: 6.8% p.a.

Lock-in Period: 5 years

Year Investment Amount (Rs.) Interest Generated for the year (Rs.) Total Interest Generated (Rs.) Total Amount (Rs.)
1 1,00,000 7,900 7,900 1,07,900
2 1,07,900 8,524 16,424 1,16,424
3 1,16,424 9,198 25,622 1,25,622
4 1,25,622 9,924 35,546 1,35,546
5 1,35,546 10,708 46,254 1,46,254

Therefore, the total amount that the individual will receive at the time of maturity is Rs.1,46,254. The total interest that is generated for investments in the scheme over a period of 5 years is Rs.46,254.

Features of NSC

The main features of the scheme are mentioned below:

  • Income is fixed
  • NSC Tax benefits are provided
  • Rate of interest is high
  • Easy to access as the scheme is available in post offices across India
  • Compounding interest
  • Entire maturity value will be received
  • Small investments can be made
  • Maturity period of 5 years and 10 years
  • NSC can be provided as collateral for loans
  • Nominations can be added
  • Premature NSC withdrawal is allowed under certain conditions

FAQs on NSC Interest Calculation

  1. Will I enjoy any tax benefits on investing in National Saving Certificate (NSC) schemes?
  2. Yes, you will be able to enjoy tax benefits under Section 24 of the Income Tax Act on investing in NSC schemes. The maximum tax exemption you can enjoy is up to Rs.1.5 lakh.

  3. Under NSC, what are the type of issues available in which I can invest?
  4. NSC offers one type of issue – VIII issue. There was earlier an IX issue which was discontinued by the government. Under VIII issue the maturity period is 5 years

    Under IX issue the maturity period was 10 years.

  5. Can NRIs invest in NSC schemes?
  6. No, Non-Resident Indians (NRIs) cannot invest in any NSC schemes.

  7. What are the modes of payment on maturity?
  8. One of the modes is through cash if the maturity amount is up to Rs.20,000. In excess of Rs.20,000, the mode of payment will be through cheque.

  9. When is the interest rate for NSC schemes revised by the Government of India?
  10. The interest rate for the National Saving Certificate schemes are revised by the Government of India every quarter. The interest rate is compounded on an annual basis but payable only during maturity.

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