Tax on Interest received in 5th year of NSC

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  1. SHAH PRITESH

    SHAH PRITESH New Member

    I WANT TO KNOW THAT HOW IS THE TREATMENT OF INTEREST ACCRUED OF 5TH YEAR ON NSC VIII ISSUE?
    WHEATHER IT IS ALLOWED AS DEDUCTION UNDER SECTION 80C OF INCOME TAX ACT 1961?
    IS THERE ANY CIRCULAR ABOUT SUCH TREATMENT
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    If the Interest is reinvested in NSC, then only you can claim a deduction under Section 80C.

    Therefore, if it is a 5 year NSC, then the interest of first 4 years would be reinvested and total principal amount repaid along with interest after completion of 5 years.

    As the interest of the 5th year has not been reinvested, therefore it would be taxable as per the income tax slabs
     
  3. SHAH PRITESH

    SHAH PRITESH New Member

    THANK YOU,
    IT WAS REALLY HELPFUL FOR ME
     
  4. Accrued interest ( which is deemed as reinvested) is also qualified for deduction for any year (except for the last year)
     
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