Does Interest earned on NSC attract income tax ?

the intt accrued on NSCs is taxable under the head of Income From Other Sources and simulteneously the same is elegible for deduction under section 80C for all the years except the last year.

As for exemption under Sec. 10(15), Only interest on notified deposits,bond or certificates are exempt u/s 10(15).

Following National Certificates have been notified to be exempt u/s 10(15)

Post Office National Savings Certificates (12 years/7 years), 7 year National Certificates(II Issue), 7 year National Certificates(II Issue)-Bank Series

Existing NSC(VIII) series is not exempt.........

I want to add one point:

Accrude interest is eligible for deduction U/s 80C, but generally we invest full amount to 1 Lacs Rs. in some bonds or MF or PPF's. Thus in that case, that interest will be taxable as the limit of 80C is upto 100000/- only. Thus we should invest only as required considering such interest also.

yes interst eare is not taxable it is first included in total income after that deduted from GTI

1st Interest earned on NSC is included in Total Income then it deducted u/s 80c. If your 80c limite of Rs. 1,00,000/-  is full then it is taxable.

Originally posted by : josh
	Hello, Does Interest earned on NSC attract income tax ? there is no tax if the interest earned upto Rs 12000 from NSC , is that right ?   Thanks josh

Please see /forum/nsc-interest-taxation-69147.asp for discussion of this issue.

interest on nsc is first included in income from other sources and then subtracted from gti under chapter VI-A (80C)

It is first included in GTI and then u get deduction U/s 80C