18 January 2014
During the year, when NSCs are purchased, the deduction of amount invested can be claimed u/s 80C for that year. In subsequent years, the interest accrued on NSC is included in income and the same amount is treated as reinvested in NSCs and hence can be claimed u/s 80C. On maturity of NSCs, the amount of interest is included in the income but no deduction is claimed u/s 80C because the amount of interest is also received and not reinvested.
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