National Saving Certificates (NSC): Income tax guidelines on curiosity defined

I had bought National Saving Certificates (NSC) value Rs. 80,000 in 2019-2020. I by no means claimed deduction for the curiosity accrued on NSC below Section 80C as I didn’t embody the accrued curiosity in my revenue previously. Can I declare the curiosity on NSC on this monetary 12 months 2022-2023? If I don’t declare any curiosity until maturity, does the complete amassed curiosity turn into taxable? At maturity can I declare the complete curiosity as revenue and declare deduction below Section 80C?

Answer: A tax payer can declare deduction in respect of investments made by him, in National Saving Certificates (NSC) within the 12 months of investments, below Section 80 C throughout the general restrict of Rs. 1.50 lakh. The curiosity accrued on NSC is absolutely taxable and might be provided for tax both on accrual foundation or the identical might be provided for tax on receipt foundation within the 12 months of maturity which must be completed on constant foundation 12 months after 12 months. Since you haven’t provided the curiosity previously on accrual foundation, you can not accomplish that for the present monetary 12 months and it’s important to now supply the identical for tax on receipt foundation within the 12 months of maturity foundation.

In case the curiosity is obtainable for tax on accrual foundation 12 months after 12 months, the accrued curiosity is deemed to have been reinvested within the NSC and one can declare deduction for the accrued curiosity for the 12 months below Section 80 C in all of the years besides the 12 months during which the NSC matures. 

Since you’d offer the curiosity for tax within the 12 months of maturity, you can not declare any deduction below Section 80 C within the 12 months during which the NSC matures and you’ll have to pay full tax on the curiosity obtained on the time of maturity.

Balwant Jain is a tax and funding knowledgeable and might be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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