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Tax on NSC interest

Santhosh (Engineer) (58 Points)

02 January 2009

Is interest earned on NSC is taxable at the time of maturity? if so Tax is to be deducted or not?or TDS certificate to be submitted?

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4 Replies

(Guest)

Interest on NSC at the time of maturity is taxable and no deduction is allowed for last year i.e. 6th year and upto 5 years interest is taxable and deduction u/s 80C is allowed

No TDS is deducted on NSC interest

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CA Sudhir Halakhandi (PRACTICING CHARTERED ACCOUNTANT) (13401 Points)
Replied 02 January 2009

Interest on NSC is taxable and it can be claculated on yearly accrual basis instead of making it taxable at the Maturity.

Further the accrued interest except the interest of yaer in which the NSCs are matured is considered as reinvestment and the same can be claimed under section 80C subject to overall limit of Rs.1 Lakh of that section which includes LIC premium, NSC Investment, repayment of Housing Loan , childern education tution fess, PPF and PF etc.

(CA SUDHIR HALAKHANDI)

Santhosh (Engineer) (58 Points)
Replied 02 January 2009

Thanks

anupam modak (Article Clerk) (30 Points)
Replied 29 July 2010

But I have a doubt ...... i.e. whether sixth year's interest is taxable or whole interest i.e. Maturity amount minus principal amount is taxable at the time of maturity ???

Suppose, NSC investment is Rs.50000.00 & after 6 years I got Rs.60000.00 & if the interest of 6th year is say Rs.1500.00 then at the time of maturity, Rs.10000.00 is taxable or Rs.1500.00 is taxable ???