Devendra (Chartered Accountant) (4775 Points)
06 May 2011
1) Mr. X is has to pay a Tax Liability of Rs. 5000, but he wants to save it by purchasing NSC. What is the amount of NSC to be purchased to save a tax of Rs.5000?
Also if he purchases them in February 11 will how much interest deduction will he get for F.Y 10-11?
2) Mr. Y purchases NSC worth Rs. 25000. Will he get deduction of the NSC purchased or only the deduction of Interest earned on NSC is allowed?
Please Help
Thank You
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 06 May 2011
| Originally posted by : Devendra | ||
 |
1.80 to 5.00 ..10% ...so liablity of 5000 would be set off with 50000 investment in NSC
interest is taxable income, only principal is allowed under sec 80C |
 |
Ashwin
(AFP)
(93 Points)
Replied 06 May 2011
In addition to what U S Sharma
has already explained...
Interest earned on NSC can be claimed as deduction under 80C only if the same is added/reported under income from other sources. So net-net - deduction is available on NSC acrued interest evry year for the first 5 years.
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India
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