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NSC vs Post Office MIS: Which Pays More Over 5 Years?

Published October 10, 2026 · 4 min read · By Ramanathan · Paired with the NSC Calculator and the Post Office MIS Calculator

The short answer: over 5 years the National Savings Certificate pays slightly more, but only slightly: on ₹5 lakh it ends about ₹4,500 ahead before tax and about ₹3,100 ahead after tax at the 30% slab, even when every rupee of Monthly Income Scheme interest is put back to work. So the choice turns on three other things: whether you need an income now, whether you might need the money early, and whether you use the old tax regime's 80C deduction. The rates below are for October–December 2026: NSC 7.7%, compounded yearly and paid at maturity, and MIS 7.4%, paid every month. Both are fixed for the full 5 years on the day you invest.

Example 1: the same ₹5 lakh, before tax

NSC adds its interest to the certificate every year, so each year's interest earns interest the next. MIS pays its interest out every month as simple interest, so what you end with depends on what you do with that income:

MIS pays ₹3,083 a month. Paid into a Post Office recurring deposit at 6.7%, that income builds up to ₹2,20,045, so with the deposit returned you end with ₹7,20,045, just ₹4,472 behind the NSC. The gap is small because MIS's lower rate is partly made up by the RD; it never closes, because the RD pays less than NSC and each month's income starts earning a month late.

Example 2: after tax at your slab

Both are taxed the same way: interest is added to your income and taxed at your slab rate, year by year as it accrues, including NSC interest you will not see until maturity and the RD interest. On ₹5 lakh:

At the 30% slab plus cess, NSC's tax is ₹70,049 and the MIS + RD plan's ₹68,654, leaving NSC ahead by ₹3,077. The order never changes, and neither scheme gives a tax-free return. If you spend the MIS income rather than reinvest it, ₹3,083 a month becomes ₹2,121 after tax at 30%.

Example 3: 80C under the old regime

Here the two genuinely differ. Under the old tax regime, money put into an NSC qualifies for the 80C deduction, and the interest of years 1 to 4 is treated as reinvested, so it counts as a fresh 80C investment in each of those years. A ₹1,50,000 NSC therefore uses the full 80C limit in the year you buy it, which saves up to ₹46,800 of tax at the 30% slab with cess, and its interest adds ₹11,550, ₹12,439, ₹13,397 and ₹14,429 of further 80C room over the next four years.

The MIS deposit qualifies for nothing. Two caveats keep this honest: all 80C items share one ₹1.5 lakh limit a year, so the NSC helps only if PPF, EPF, ELSS or insurance premiums have not already used it; and under the new tax regime, now the default, there is no 80C deduction at all, so the advantage disappears.

Flexibility: getting your money out

An NSC is generally locked for 5 years. It can be closed early only in limited cases, such as the death of the holder or a court order, though you can pledge it as security for a bank loan. MIS can be closed after the first year: 2% of the deposit is deducted if you close it before 3 years, 1% after that. Close a ₹5 lakh MIS after 2 years and you get back ₹4,90,000, on top of the ₹74,000 of income already paid. If there is any chance you will need the money early, that alone can settle it.

Limits

NSC has no upper limit; you can invest from ₹1,000 in multiples of ₹100. MIS takes at most ₹9 lakh in a single account and ₹15 lakh in a joint account, in multiples of ₹1,000. At those limits it pays ₹5,550 and ₹9,250 a month.

Which should you choose?

• You need a regular income, for example in retirement: MIS. It is built for exactly that, and the small gap to NSC is the price of being paid every month.
• You do not need the income and use the old regime's 80C: NSC, which pays slightly more and adds a deduction.
• You do not need the income but might need the money early: MIS, because NSC is effectively locked.
• Neither income nor 80C matters to you: the two are within about 1% of each other, so pick the one that is more convenient, or compare them with a 5-year fixed deposit, which some banks pay more on, especially to senior citizens.

The NSC calculator and the Post Office MIS calculator work through your own amount and tax slab, and the MIS calculator shows the MIS + RD plan and the early-closure refunds.

Run your own numbers:
NSC Calculator MIS Calculator

Related guide: SWP vs FD for monthly income

Rates for October–December 2026 under the government notification of 30 September 2026, verified October 10, 2026. Small savings rates are reviewed every quarter; tax rules change with each Union Budget.