24 July 2008
Please clearify about scheme whether it is NSS 1987 and 1992.
National Savings Scheme, 1987, was covered by Sec. 80CCB, which allowed the contribution as deduction from taxable income subject to the amount of both principal and interest being taxable on withdrawal. This scheme was closed with effect from April 1, 1992.
National Savings Scheme, 1992, allows deduction for the contribution made for this purpose under Sec. 80C subject to the ceiling under Sec. 80C with interest income being taxable, while the principal amount on return will not be so taxable.
Interest under this scheme can be offered either on accrual basis from year to year or on cash basis in the year of withdrawal.
01 August 2024
Interest earned on National Savings Scheme (NSS) accounts, including those under the National Savings Scheme 1987, is indeed taxable. Here’s a detailed explanation:
### Taxability of Interest on NSS:
1. **Taxability Under Income Tax Act:** - Interest earned on NSS is taxable under the Income-tax Act, 1961. The NSS interest is not exempt from tax and must be included in your total income while filing your income tax return.
2. **Relevant Provisions:** - **Section 10(15) of the Income-tax Act, 1961:** This section provides tax exemptions for certain types of income. However, as of the latest amendments, interest earned on NSS does not fall under the exemptions provided by this section.
3. **Section 56 of the Income-tax Act, 1961:** - **Income from Other Sources:** Interest earned on NSS is categorized under "Income from Other Sources" and must be included in the taxable income of the individual.
4. **Assessment of Interest:** - Interest accrued on NSS accounts must be included in your income and taxed according to your applicable tax slab. The interest is added to the total income and taxed as per the prevailing rates for individuals.
### Specific Clauses:
- **Clause Not Covered:** The NSS interest is not covered under the tax-free instruments listed in various provisions and notifications. It falls under the general category of interest income that is subject to taxation.
### Summary:
Interest on the National Savings Scheme (NSS) accounts is taxable under the Income-tax Act, 1961, and should be included in your total income. It is not exempt from tax and must be reported as "Income from Other Sources" while filing your income tax return.
For exact calculations and further details, refer to the Income-tax Act, 1961, and consult a tax advisor to ensure accurate tax reporting and compliance.
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