13 January 2009
Interest accrued on NSCs is subject to tax on accrual basis (except in last year)
This is advantageous especially because althouth interest accrued amount is addded to Income, one can claim like amount as Deduction u/s 80C. In effect, there is no tax except in case of assessees who can afford to save in approved media upto the maximum extent by investing in LIC, PPF and ELSS etc
If interest is subjected to tax, maturity proceeds of NSCs is exempt (except last year's interest which has to be returned in the year of maturity)
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