NSC Interest & 80C Calculator

NSC interest is taxable every year as income from other sources, even though it is paid only at maturity. Because the interest is deemed reinvested, it also qualifies for the 80C deduction (section 123 under the Income-tax Act 2025) in every year except the maturity year, and the amount invested qualifies in the purchase year. The deduction is capped at ₹1,50,000.

1. Each certificate's rate for the chosen year comes from the NSC rate table for its issue (VIII or IX) and purchase period.
2. That year's interest is the amount invested times the rate, because interest accrues yearly and is deemed reinvested under Rule 15 of the NSC (IX-Issue) Rules.
3. In the purchase year there is no interest, and the whole amount invested qualifies for deduction under section 80C(2)(ix) (section 123, Schedule XV of the 2025 Act).
4. In each later year before maturity, the interest is taxable and the same amount qualifies for the deduction.
5. In the maturity year the interest is taxable but earns no deduction, because it is not reinvested.
6. Interest and deductions are added up across certificates, and the total deduction is capped at ₹1,50,000.

Anita is working out her NSC figures for AY 2026-27 (FY 2025-26) under the Income-tax Act 1961. She holds three VIII Issue certificates: ₹1,00,000 bought in FY 2023-24, ₹50,000 bought in FY 2025-26 and ₹40,000 bought in FY 2020-21.

1. ₹1,00,000 bought in FY 2023-24, at the AY 2026-27 rate of 8.29%: ₹8,290 of interest and a deduction of ₹8,290.
2. ₹50,000 bought in FY 2025-26, so this is its purchase year: no interest, and the whole ₹50,000 is deductible.
3. ₹40,000 bought in FY 2020-21, so this is its maturity year: 8.85% gives ₹3,540 of interest and no deduction.
4. Total interest: ₹8,290 + ₹3,540 = ₹11,830.
5. Total deduction: ₹8,290 + ₹50,000 = ₹58,290, within the ₹1,50,000 cap.

For AY 2026-27, Anita reports ₹11,830 of NSC interest as income from other sources and claims a ₹58,290 deduction under section 80C.

Yes. NSC interest accrues every year and is taxable each year as income from other sources, even though it is paid only at maturity.

Yes, in every year except the maturity year. The interest is deemed reinvested, so it qualifies under section 80C (section 123 of the Income-tax Act 2025) within the ₹1,50,000 cap; in the final year it is not reinvested and earns no deduction.

Yes. The whole amount invested qualifies in the year of purchase, within the ₹1,50,000 cap, and no interest is taxable in that year.

No. Under the 1961 Act a year is named by its assessment year, one ahead of the financial year, so AY 2026-27 is FY 2025-26. Under the Income-tax Act 2025 the tax year is the financial year itself, so tax year 2026-27 is FY 2026-27.

VIII Issue and IX Issue certificates in the 1961 Act tables, for AY 2017-18 to AY 2026-27, and VIII Issue in the Income-tax Act 2025 table for tax year 2026-27. Each certificate's rate depends on its issue and purchase period.