19 March 2013
Interest on NSC accrues every year and stands reinvested at the end of each year.
Therefore, usually, the interest is accounted every year as income from other sources and as the amount is reinvested, credit is taken for the reinvestment by way of deduction under Section 80C. In the last year of the scheme however, as there will be no reinvestment, the deduction under Section 80C will not be available and the interest for the year will be offered to tax.
If, however, one chooses to offer the entire interest income on cash basis in the last year, the entire interest will be taxable in that year
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