Post Office NSC Interest Tax applicability

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This discussion addresses a query regarding the taxability of interest earned on a Post Office National Savings Certificate (NSC) and its reflection in the Annual Information Statement (AIS). The user's employee's NSC interest wasn't shown on the AIS for the initial years, leading to questions about tax exemption and reporting. The response clarifies that the interest is taxable even if Section 80C deductions aren't claimed and that the AIS reporting process was refined over time. It's advised that the interest should have been declared in the relevant financial years it was earned.

Ratheesh

Ratheesh (Querist)

12 August 2024 Dear Sir,

One of our employees deposited ₹250,000 in the post office as NSC in June 2019, with a maturity date in June 2024.

The interest for the NSC was not reflected in his AIS until FY 2022-23, even though he filed his ITR for that year. In FY 2023-24, only the interest for FY 2023-24 was reflected. Based on this, please clarify the following:

1. Why was the interest for the first three years not reflected in the AIS? Is there a possibility that it was tax-exempt, or was there another reason? Please note that he did not claim any Section 80C exemption for interest reinvestment in previous years.

2. What will be reflected in the AIS for FY 2024-25? Will it include only the interest for the final year, or will it show the cumulative interest for the entire period, including the first three years and the last year?

3. If the cumulative interest for the first three years is not reflected in the next AIS, should he declare it as other income for those years?

Thank you in advance for your assistance.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

13 August 2024 1. That was due to refinement of the process of reporting. It was taxable even if deduction u/s. 80C was not claimed.
2. As of now it seems only for the current year interest.
3. No, It was supposed to be declared in relevant year/s.

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Ratheesh

Ratheesh (Querist)

13 August 2024 Thank you, Sir, for your prompt response.

Message likes : 1 times

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

13 August 2024 You are welcome.

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