NSc interest
This query is : Resolved
06 April 2009
When we purchase NSC,then we get deduction u/s 80c.
Now when intt. Accrued on such NSC,it is exempt under sec10(15).
My question is that can we get the deduction of 80C on such intt ,although such intt ìs not forming part of our gross total income....??????????
Now when intt. Accrued on such NSC,it is exempt under sec10(15).
My question is that can we get the deduction of 80C on such intt ,although such intt ìs not forming part of our gross total income....??????????
06 April 2009
Firstly Interest on NSC is taxable under Income from Other source then only it is deductible u/s 80C subject to all deduction of 80C upto Rs. 1 Lakh.
06 April 2009
i agree with the expert
07 April 2009
Sorry i hav doubt on that view of expert...plz check out sec10(15) with the prov of 80C.
09 August 2024
The treatment of National Savings Certificates (NSC) interest under Section 10(15) and Section 80C of the Income Tax Act can be nuanced. Let’s clarify how these sections interact:
### **1. Section 80C: Deduction on NSC Investment**
- **Section 80C** allows a deduction for investments made in specified financial instruments, including NSCs.
- **Principal Investment:** When you purchase NSCs, the principal amount invested qualifies for a deduction under Section 80C. This deduction is claimed in the financial year of the investment.
### **2. Section 10(15): Exemption on NSC Interest**
- **Section 10(15)** provides an exemption for the interest accrued on NSCs.
- **Interest Exemption:** The interest earned on NSCs is exempt from tax under Section 10(15) up to a certain limit. This means that the interest accrued on NSCs does not form part of the gross total income and is not subject to income tax.
### **Interaction Between Sections 80C and 10(15):**
1. **Initial Deduction for Principal:**
- You can claim a deduction for the amount invested in NSCs under Section 80C. This deduction is for the principal amount, not the interest.
2. **Interest Accrual and Tax Treatment:**
- The interest accrued on NSCs is exempt under Section 10(15). This exemption means that the interest does not need to be reported as part of your income and is not subject to income tax.
- Since the interest is exempt, it is not included in your gross total income.
3. **Deduction of Interest under 80C:**
- You **cannot** claim an additional deduction under Section 80C for the interest accrued on NSCs. The interest, even though it is exempt under Section 10(15), does not qualify for a further deduction under Section 80C.
- Section 80C deductions are only applicable to the principal investment amount and not to the interest earned.
### **Conclusion:**
- **Section 80C Deduction:** Only the principal amount invested in NSCs qualifies for a deduction under Section 80C.
- **Section 10(15) Exemption:** The interest earned on NSCs is exempt under Section 10(15) and does not form part of your gross total income. It does not qualify for any additional deduction under Section 80C.
### **Example:**
- **Investment:** If you invest ₹1,00,000 in NSCs, you can claim a ₹1,00,000 deduction under Section 80C in the year of investment.
- **Interest:** If the interest accrued on this NSC is ₹10,000, this interest is exempt from tax under Section 10(15). You do not receive any additional deduction for this ₹10,000 under Section 80C.
For personalized advice and to ensure compliance with current regulations, consulting a tax professional or financial advisor is recommended.
### **1. Section 80C: Deduction on NSC Investment**
- **Section 80C** allows a deduction for investments made in specified financial instruments, including NSCs.
- **Principal Investment:** When you purchase NSCs, the principal amount invested qualifies for a deduction under Section 80C. This deduction is claimed in the financial year of the investment.
### **2. Section 10(15): Exemption on NSC Interest**
- **Section 10(15)** provides an exemption for the interest accrued on NSCs.
- **Interest Exemption:** The interest earned on NSCs is exempt from tax under Section 10(15) up to a certain limit. This means that the interest accrued on NSCs does not form part of the gross total income and is not subject to income tax.
### **Interaction Between Sections 80C and 10(15):**
1. **Initial Deduction for Principal:**
- You can claim a deduction for the amount invested in NSCs under Section 80C. This deduction is for the principal amount, not the interest.
2. **Interest Accrual and Tax Treatment:**
- The interest accrued on NSCs is exempt under Section 10(15). This exemption means that the interest does not need to be reported as part of your income and is not subject to income tax.
- Since the interest is exempt, it is not included in your gross total income.
3. **Deduction of Interest under 80C:**
- You **cannot** claim an additional deduction under Section 80C for the interest accrued on NSCs. The interest, even though it is exempt under Section 10(15), does not qualify for a further deduction under Section 80C.
- Section 80C deductions are only applicable to the principal investment amount and not to the interest earned.
### **Conclusion:**
- **Section 80C Deduction:** Only the principal amount invested in NSCs qualifies for a deduction under Section 80C.
- **Section 10(15) Exemption:** The interest earned on NSCs is exempt under Section 10(15) and does not form part of your gross total income. It does not qualify for any additional deduction under Section 80C.
### **Example:**
- **Investment:** If you invest ₹1,00,000 in NSCs, you can claim a ₹1,00,000 deduction under Section 80C in the year of investment.
- **Interest:** If the interest accrued on this NSC is ₹10,000, this interest is exempt from tax under Section 10(15). You do not receive any additional deduction for this ₹10,000 under Section 80C.
For personalized advice and to ensure compliance with current regulations, consulting a tax professional or financial advisor is recommended.
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