NSC Interest Income Query - Kindly Help

NSC interest is earned irrespesctive of the your status of filing the return, 

so the interest was earned in 1st, 2nd , 3rd, 4th and so on years and compouned with that year's income, which was if taxable was liable to file return, if not then u did not filed, 

in the maturity year, u have to show the interest of only that year .

Originally posted by : U S Sharma
	NSC interest is earned irrespesctive of the your status of filing the return,  so the interest was earned in 1st, 2nd , 3rd, 4th and so on years and compouned with that year's income, which was if taxable was liable to file return, if not then u did not filed,    in the maturity year, u have to show the interest of only that year .

Sir,

In case return was filed without showing interest from NSC nor deduction claimed each year in the 1st five years then now on maturity, what is to be done? Can only interest of last year be shown or the full interest is to be considered as taxable? Can deduction be claimed and what amount?

Request to kindly reply as soon as possible..

Regards,

Hitesh

in such case you have to offer the full interest earned in previous years in current year for taxation.

I got a question on feature of NSC, where you can claim interest earned on NSC under Section 80C.

I am not sure whats the advantage of this feature. For example, if my income in a financial yr is 1.8 lakhs, which is tax free (As per current slab). If I had invested 10K in NSC last yr, so this financial yr, interest earned on NSC is approx 800. Now, whats the point in showing this 800 as income frm other sources, and be eligibal for tax (1.8 laks+ 800), as you have anyways invested that.

Instead, If I dont show that interest earned at all, it shoudl also be fine.

Second doubt i have is, is it compulsory to declare interest earned every year frm NSC. Also, shoudl it be as 'Income from other source, if you are salaried.

Thanks

HAris

Hi, I had the same doubt before.

First of all, NSC interest in earned half yearly n also compounded half yearly.

It is to be shown as income under other sources and also deduction under 80C can be claimed as the same gets reinvested in NSC and final amount is received at maturity. So except the final half year interest which doesnt get reinvested, on all remainin interest deduction can be claimed. So net effect is nil as interest is shown as income and deduction claimed.

If no income is shown every year, the full interest will have to be offered for taxation on Maturity as given above by U.S. Sharma sir.

Regards,

Hitesh

Thanks for getting back gus.

Now as SBI is offering 9.25% on tax saving FDs for 5 yrs, Dont you think FD is more attractive over NSC, as NSC offers only 8%,  interest on both taxable and FD cumulates every quarter.

Also, for FDs, i think TDS is deducted by bank only if yearly interest earned in more than 10K. Otherwise,, I get full interest and bank will deduct nothing, and i have to manually declare FD's interest as "income from other source" once it matures ,,,, correct me if I am missing anythng here.