06 October 2009
Only Interest amount received is liable to tax and not the principal amount invested.
One should show accrued interest on NSC every year on accrual basis as income and simultaneously get deduction for the same u/s 80C as interest is deemed to be re-invested. Only 6th year's interest is not deemed as re-invested and u/s 80C no deduction is allowed for the said interest.
If you haven't offered interest income on accrual basis, you may show now on receipt basis and pay tax on Interest amount.
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