What is the tax treatment of NSC?

What is the tax treatment of NSC?

       The initial investment in NSC is tax free to the extent of ₹1,50,000 under 80C. Annual interest accrued on NSC is reinvested in the scheme, and hence, is also tax-free. It is only in the last year that any income tax will be payable. This is because the interest that you earn in the last year will not be reinvested, but paid out. In this case, the investor will declare the final year’s interest as ‘income from other sources’. There is no TDS on NSC. Hence, the entire maturity value of the certificates will be handed to the investor, and the payment of applicable taxes will be his responsibility.



    • Related Articles

    • Which is better - NSC or Tax saving FDs?

      There are many advantages of investing in NSC over Tax saving FDs. The interest accrued in the NSC will not attract TDS (Tax deducted at source). Bank FDs attract a 10% TDS deduction if the interest earned in a financial year is more than Rs.10,000. ...

    • What is the tax treatment of NPS?

      As per new rules, 60% of the corpus withdrawn at the time of maturity is completely tax-free. The rest 40% has to be annuity. Annuity income in the subsequent years will be taxable, based on the income tax slab of the investor. However, the total ...

    • How is ELSS different from other tax saving options like PPF & NSC?

      ELSS is different from other tax saving investments in many ways. While most of them are debt instruments, ELSS is equity based. It has a relatively lower lock-in than schemes like PPF, NPS, etc. However, being market linked, it takes on more risk to ...

    • What is National Savings Certificate (NSC)?

      NSC is a tax saving bond issued by the government via Postal services. It is characterized by 5 years and 10 years maturity periods and enjoys tax exemption under section 80C.

    • What will be the tax treatment if I sell the new property within three years of its purchase?

      If the new property is sold within three years from the date of acquisition the, for calculating the capital gains, the cost of acquisition of this new property will be reduced by the amount of capital gain on which the exemption was claimed earlier. ...