NSC interest

This query is : Resolved

CA Rashida (Querist)
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09 December 2010 Hi,
The interest income on NSC for first five years is exempt from tax U/s 80C. If an assessee purchases NSc in the mid of F.Y> like say November .Now in his IT return can he claim accrued interest Of Rs.80.16 on Rs.100 for full year or interest will be calculated proportionately for 4 months?

CA Sanat Pyne

CA Sanat Pyne (Expert)
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09 December 2010 INTEREST WILL BE CALCULATED ON YEARLY BASIS.

PLEASE SEE V.K.SINGHANIA'S DIRECT TAX BOOK
PARA NO 235.3
PROBLEM NO 235.3.P1

Bimal Thacker

Bimal Thacker (Expert)
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09 December 2010 1) Interest on NSC is not exempt U/S 80C, but it is reinvestment of interest accrued on NSC is consider as eligible deduction U/S 80C.

2) Interest on NSC accrued on yearly basis So practice is to take income for full year from the next year and claim the same as eligible deduction U/S 80C,

3) As in last year the maturity value is withdrawn and hence no re-investment of accrued interest so duduction on interest U/S 80C in last year not eligible.

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CA Rashida

CA Rashida (Querist)
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10 December 2010 So, according to you i should not take any interest in this year but should start showing interest in IT return from next F.Y. i.e, 2011-12??

CA Sanat Pyne

CA Sanat Pyne (Expert)
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10 December 2010 First year interest should be taken in the F.year 2011-12.

for detail clarification
PLEASE SEE V.K.SINGHANIA'S DIRECT TAX BOOK
PARA NO 235.3
PROBLEM NO 235.3.P1

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