Interest on NSC is Tax-free & 80C!

Hi Team…

Can somebody clarify on this: Is the interest earned on NSC tax free? If not, how do I claim it?

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Deposits up to Rs. 1.50 lakh in NSC qualify for Deduction Section 80C of the Income Tax Act actually and even accrued interest on NSC also qualifies for deduction u/s. 80C.

NSC interest is taxable, as I’m aware.

Only the final year’s interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested but is paid back to the investor along with the interest of the earlier years and the capital amount.

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No, the interest earned on National Savings Certificate (NSC) is NOT tax-free. The interest is fully taxable. Although this interest can be claimed as a deduction under Section 80C for all the years (except the last year), you must make it a point to mention this income as ‘income from other sources’ to get the benefits of Section 80C. Otherwise, you may have to end up paying taxes for it.

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