How to declare NSC interest in your ITR: the complete guide

NSC doesn't generate TDS, doesn't appear in your AIS, and doesn't issue Form 16A. If you haven't declared it, you're not alone — here's exactly how to fix it, year by year, for old and new tax regimes.

Published 23 May 2026 · Last updated 23 May 2026 nscitrincome-tax80cschedule-osgovernment-savings

Every year, thousands of NSC investors make the same filing mistake: they either declare nothing (because there’s no TDS nudge and no AIS entry) or they dump the entire 5-year interest pile into the maturity year and call it done.

Both are wrong. And unlike an FD where the bank handles the reporting, NSC leaves the record-keeping entirely to you.

This guide covers how to do it correctly — whether you bought NSC last month, five years ago, or never declared the interest at all.

Why NSC creates a unique ITR problem

With a bank FD, three things keep you honest: TDS is deducted at source, the interest appears in your Annual Information Statement (AIS), and Form 26AS carries a credit. The friction of doing nothing is higher than the friction of filing.

NSC has none of these guardrails:

No TDS. The post office does not deduct tax on NSC interest at any point.
No AIS entry. Your Annual Information Statement will show nothing for NSC — not the purchase, not the interest, not the maturity. Zero.
No Form 16A. There is no tax-deduction certificate to reconcile against.

The result: NSC interest is essentially invisible to the tax system until you declare it. This is not a loophole — the income is still taxable, and the deemed-reinvestment 80C claim is still available — but the absence of automated reporting makes it easy to forget.

The legal basis: what “deemed reinvested” actually means

Para 5(3) of G.S.R. 919(E) — the NSC (VIII Issue) Scheme 2019, notified 12 December 2019 — states that interest earned in Years 1 through 4 is “deemed to have been reinvested.”

The Income Tax Act treats this deemed reinvestment as a fresh NSC investment in that financial year. The consequences:

The interest is income from other sources in the year it accrues (not in the year of maturity).
The same amount simultaneously qualifies for Section 80C deduction in the same year — because a fresh NSC investment was deemed to have been made.
In the old tax regime, these two entries cancel out: income declared = 80C claimed, net tax impact = ₹0 for Years 1–4.
Year 5 interest is the exception: it accrues but is not deemed reinvested. It is paid out at maturity. Section 80C does not apply. It is taxable in full.

Under the new tax regime (Section 115BAC, default from FY 2023-24), 80C deductions are unavailable. The income still accrues year by year, but there is no offsetting 80C claim. All five years’ interest is taxable at your slab rate.

Year-by-year accrual schedule

For a ₹1,00,000 NSC purchased at 7.7% p.a. (Q1 FY 2026-27 rate; also the rate in force since Q1 FY 2023-24):

NSC Year	Opening balance	Interest accrued	80C-eligible (old regime)
Year 1	₹1,00,000	₹7,700	Yes
Year 2	₹1,07,700	₹8,293	Yes
Year 3	₹1,15,993	₹8,932	Yes
Year 4	₹1,24,925	₹9,619	Yes
Year 5	₹1,34,544	₹10,360	No
Maturity		₹1,44,903

For other principal amounts: multiply each interest figure proportionally (e.g. for ₹2,00,000 at 7.7%, Year 1 interest = ₹15,400; Year 5 interest = ₹20,720).

If you hold multiple NSC certificates at different rates (bought in different quarters), calculate each certificate’s accrual independently using its own locked rate, then aggregate by year.

How to file — old tax regime (ITR-1)

ITR-1 applies if your income is from salary/pension + one house property + other sources, and your gross income is below ₹50 lakh. NSC is common among exactly this group.

For each of Years 1–4 (in the financial year the interest accrues):

Step 1: Calculate this year’s accrued interest using the formula above.

Step 2: Open ITR-1 → Part B (Gross Total Income) → Schedule OS (Income from Other Sources). Under the sub-head “Interest on deposits (not being a savings bank account),” enter the accrued interest amount for this certificate for this year.

Step 3: Open Part C (Deductions under Chapter VI-A) → Section 80C. Under “National Savings Certificates (VIII Issue),” enter the same accrued interest amount. This is the deemed-reinvestment 80C claim.

Net result: the Schedule OS entry and the 80C entry exactly cancel. Your taxable income from NSC for Years 1–4 = ₹0.

For Year 5 only:

Repeat Step 2 (declare in Schedule OS). Do not repeat Step 3 — Year 5 interest is not eligible for 80C. The full Year 5 interest amount is added to your taxable income.

At ₹1 lakh principal and 30% slab, Year 5 tax = ₹10,360 × 30% = ₹3,108.

How to file — old tax regime (ITR-2 and ITR-3)

The mechanics are identical. The navigation differs:

Schedule OS: Same location and sub-heads. Enter accrued interest for each certificate, each year.
Schedule VI-A (80C): Under “80C investments,” include the NSC accrued interest under the NSC (VIII Issue) sub-head for Years 1–4.

If you are an ITR-2/3 filer with salary income and significant capital gains, NSC interest flows the same way. It does not interact with Schedule CG or any other schedule.

How to file — new tax regime

Under Section 115BAC, deductions under Chapter VI-A (including 80C) are not available.

For each of Years 1–5: Declare the accrued interest in Schedule OS under “Interest on deposits (not being a savings bank account).” No 80C entry. The full interest amount adds to your taxable income at your applicable slab rate.

At ₹1 lakh principal and 30% slab:

Year	Interest	Tax at 30%
Year 1	₹7,700	₹2,310
Year 2	₹8,293	₹2,488
Year 3	₹8,932	₹2,680
Year 4	₹9,619	₹2,886
Year 5	₹10,360	₹3,108
Total	₹44,903	₹13,472

Post-tax effective yield under new regime (at 30% slab): approximately 5.6% p.a. Compare this to PPF at 7.1% (fully tax-free under both regimes) — at the 30% slab and above, PPF dominates for EEE investors under the new regime.

Multiple NSC certificates: how to aggregate

If you hold certificates bought in different financial years (possibly at different locked rates), handle each independently:

Maintain a register: certificate number, purchase date, principal, locked rate.
For each certificate, calculate the current year’s accrued interest using its own rate.
Sum all certificates’ interest for the current year → that is your total Schedule OS entry.
Sum all certificates’ interest for Years 1–4 → that is your total 80C claim for NSC (subject to the overall ₹1.5L 80C ceiling across all instruments).

Example: you hold Certificate A (₹1L at 7.7%, Year 3 of its life) and Certificate B (₹50,000 at 7.5%, Year 1 of its life):

Schedule OS: ₹8,932 (A Year 3) + ₹3,750 (B Year 1) = ₹12,682
80C for NSC: ₹8,932 + ₹3,750 = ₹12,682 (both years are 80C-eligible)
Net tax on NSC interest = ₹0

AIS / Form 26AS: what you will not see

Your Annual Information Statement (AIS) on the income tax portal aggregates most income from banking and financial institutions. NSC will not appear here:

Post offices do not report NSC purchases or maturities to the tax department under the current SFT (Statement of Financial Transactions) framework.
The ₹10 lakh SFT threshold for cash deposits applies to post office savings accounts, not to NSC certificates.

This means the tax department does not automatically know you own NSC. This is not a reason to skip declaration — undeclared income remains taxable and can surface in scrutiny if your bank credits correlate with NSC maturity amounts. Declare correctly; the records just happen to be self-maintained rather than AIS-maintained.

If you haven’t filed NSC interest in prior years

If you purchased NSC in a prior financial year and did not declare the accrued interest:

If the return for that year is still open for revision (within 2 years of the relevant assessment year): file a revised return adding the Schedule OS entry and the 80C claim for the missed year. Since the 80C claim cancels the income for Years 1–4, your revised return will typically show no additional tax (and no interest/penalty implication for those years at the old regime).

If the return is no longer revisable: do not backfill. Simply start declaring from the current year. At maturity, the Year 5 interest will be taxable — make sure you declare it at that point. There is no practical mechanism for the tax department to reconstruct missed Years 1–4 interest if AIS shows nothing.

Important: this guidance applies to the typical case. If your NSC investment is large (₹10 lakh or more) and you are in scrutiny, consult a CA. A revised return may be advisable even if technically outside the usual revision window via a condonation of delay application.

Getting your accrual certificate from the post office

Para 5(3) of G.S.R. 919(E) entitles you to an annual accrual of interest certificate from the issuing post office. This is an official document showing the interest deemed accrued for each year of the certificate’s life — the exact amounts you need for your Schedule OS and 80C entries.

For physical (paper) certificates: Visit the post office where the certificate was issued. Request “NSC annual accrual certificate” for your certificate number. Processing time varies; a request in writing typically gets a response within a few days.

For e-mode NSC (purchased through DOP Internet Banking or IPPB): Log in to your DOP Internet Banking or IPPB Mobile Banking account. Navigate to “NSC” under investments. The transaction history and certificate detail page typically shows the opening balance and accrued interest. An official accrual statement can be downloaded or requested via the in-app service request.

If the post office does not have a standard format for the certificate, you can maintain a self-computed schedule (using the formula above) and note it in your ITR filing records. The computation is deterministic — the same formula as the gazette — so a self-maintained register has the same accuracy as the post office certificate.

Quick reference: what goes where

	Schedule OS entry	80C entry	Net tax (30% slab)
Old regime, Year 1–4	Yes — accrued interest	Yes — same amount	₹0
Old regime, Year 5	Yes — accrued interest	No	Interest × slab rate
New regime, Year 1–5	Yes — accrued interest	No	Interest × slab rate

And the things that do not apply to NSC:

TDS: None deducted at any point.
Form 16A: Not issued.
AIS entry: Not populated by post offices.
Form 15G/15H: Not applicable (no TDS to prevent).

Rate used: 7.7% p.a., NSC (VIII Issue), Q1 FY 2026-27. Confirm current rate at nsiindia.gov.in before filing.

Primary source: NSC (VIII Issue) Scheme 2019, G.S.R. 919(E), 12 December 2019, as amended by G.S.R. 284(E), 5 May 2020.