I think the article needs a bit of rewriting to ensure greater clarity. I believe that the interest earned in the first four years does qualify for deduction under Section 80C but it needs to be first declared as part of interest income and then included as part of the deductions allowed under section 80C.
You mention in the post that only the interest earned in the final fifth year is taxed, but actually, you'll earn the interest of all the 5 years combined in the last year, and you'll have to pay tax on the interest earned for all the 5 years in the fifth year, right? Please correct the post to avoid confusion.
The interest on NSC for the first 4 years can also be claimed as an NSC investment deduction. This is because the interest is reinvested in NSC.
The interest earned in the last year, i.e. year 5, becomes available in the hands of the investor. Hence, it becomes taxable under the head “Income from Other Sources” and is taxed as per the applicable tax slab rate of the individual.
I think the article needs a bit of rewriting to ensure greater clarity. I believe that the interest earned in the first four years does qualify for deduction under Section 80C but it needs to be first declared as part of interest income and then included as part of the deductions allowed under section 80C.
Company: Hindustan Aeronautics Limited
Theme - Indian Public sector undertaking companies
Company: Hindustan Aeronautics Limited (HAL)
Theme: Indian PSUs
You mention in the post that only the interest earned in the final fifth year is taxed, but actually, you'll earn the interest of all the 5 years combined in the last year, and you'll have to pay tax on the interest earned for all the 5 years in the fifth year, right? Please correct the post to avoid confusion.
Hi Bhavesh,
The interest on NSC for the first 4 years can also be claimed as an NSC investment deduction. This is because the interest is reinvested in NSC.
The interest earned in the last year, i.e. year 5, becomes available in the hands of the investor. Hence, it becomes taxable under the head “Income from Other Sources” and is taxed as per the applicable tax slab rate of the individual.