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(Querist)
06 September 2012 Whether interest accrued on National Savings Scheme is taxable or not
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Praveen Kumar Rathi

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Praveen Kumar Rathi (Expert)
07 September 2012 The interest on National Saving Certificates is taxable. However, the mode of taxation would depend on your accounting method. If you are following accrual system of accounting then you need to offer interest every year on accrual basis. If you are following cash system of accounting then interest can be offered at the time of maturity. I would advice that if it is offered every year then you do not carry forward the burden to the last year. Secondly the accrued interest is treated as fresh investment and qualifies for tax deduction under section 80-C provided it is offered for taxation. You do not enjoy this benefit if interest is offered on maturity since interest is paid out in cash.
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