23 August 2011
Hello, Suppose, I want to invest 50,000/- in long term tax saving FD in a nationalised bank. Can I avail 50,000 under sec.80c for the first year? and also 50,000 plus interest amount 4500 @9% in the next preceding year?
example : investment 50,000 + 4500 interest = 54500 first year. 54000+ again 4500 interst for second year..., and so on till 5th year?
23 August 2011
For the purpose for u/s 80C there is separate type of Term Deposit Deposit. You should not taken loan on this Term Deposit.Accrued interst is not eligible as reinvestment u/s 80c.Interest income is taxable according to accrued basis.
24 August 2011
I agree with the opinions given by both the experts.
As interest is taxable in Bank Tax Saving FDs, NSC is a better option in compare to FDs. There Interest is deemed to be reinvested and such deduction in respect of first 5 years interest can be claimed.