13 March 2013
My Income in the Year 1 to 5 ( In case of 6th year NSC) is below the maximum exemption limit and I do not file the return of Income in that year. But what if in 6th year I have to tax entire interest in 6th year or only that belonging to 6th Year only ?? Kindly help Reply
13 March 2013
Ideal scenario is that you filed your returns for previous years, declared accrued NSC interest every year as Income from other sources and claimed deduction u/s 80C as amount re-invested in NSC; this nullifies any tax liability on interest earned during previous years. In this case only interest received in 6th year is taxable.
But in your case entire interest amount is taxable in 6th year.
13 March 2013
You may offer interest for 6th year for tax purposes. Since income was below taxable limit in year 1-5 there was no liability to file return.
You may opt for accrual system and consider interest earned only in the 6th year for tax purposes.
14 March 2013
Dear Experts Thanks for the views but I have one more question that where it is written in the law that filing of return is mandatory even if my income is below taxable Limit.Is there any Judgment or rules which mandates it to file the return to claim the deduction.
14 March 2013
Interest earned can be deemed as offered to tax in previous years.
It is fine, as your incomes including interest so earned were below the taxable limits, you were not mandatory required to file tax returns for those previous years.
14 March 2013
Yes Sir so if my income is below exemption after offering NSC interest as income , Will it be taxable as my Income in 6th year or every year ?
As you have already offered interest earned in previous years, only interest earned in final year is taxable and, if your taxable income in current year is also below the basic exempted limits, you don’t need to worry at all.
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