28 July 2010
Every year the interest on NSC accumulates till maturity. That interest is treated as again invested in NSC. That interest is eligible for deduction (Previously called rebate) U/s 80c. Please note that the interest on NSC at the maturing year is eligible for tax benefit as it is not again reinvested. Calculation of Interest on NSC: Now the rate of interest on NSC is 8% Pa. They will give you compound interest for every 6 months. It will be as follows (Interest calculated on Rs.100/-.as example) Rs. 8.16 1st year (Can claim full even if you buy on 31st March) Rs. 08.83 2nd year Rs. 09.55 3rd year Rs.10.33 4th year Rs.11.17 5th year Rs.12.08 6th year (No tax benifit) ------------ Rs.60.12 is the total 6 years interest (100+62.12=Rs.162.12) If you are having 25,000 NSC (Face Value), then you will finally get 160.12 x 250=Rs.40,030/-
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