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Interest on nsc matured

Sonia (Auditor) (112 Points)

28 December 2012

I purchased NSC 6 years back for Rs. 25,000, and it matured in this year i.e, Nov 2012 for Rs. 40,000. I did not claim any interest annually u/s 80C for deduction.

Now, as per my understanding,

1) Rs. 25000 (i.e, principal amount) is exempt from tax

2) Rs. 15000 (interest) portion is taxable as "income from other sources".

3) Can I also claim Rs. 15000 as deduction u/s 80C?

Please correct me if I am wrong and also, confirm on point 3.

Thanks.

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4 Replies

@VaibhavJ (Believe!! Live your dreams!) (33516 Points)
Replied 28 December 2012

Yes you can claim as exemption. But it exemption is allowed in the finacial year in which it is accrued.

Thanks!!

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Sonia (Auditor) (112 Points)
Replied 28 December 2012

sorry, i am not sure what you mean. You said that exemption is allowed when it is accrued, that is on annual basis, but my question is whether any exemption is available in year of maturity.

Also, i just read some notes, it mentioned that it is not allowed in year of redemption since it is not reinvested. So that means, I lose deduction u/s 80C and full amount is now chargeable to tax "IOS"????

Vineet Goyal (Assistant Manager - Finance & Accounts) (702 Points)
Replied 28 December 2012

The year in which you have invested INR 25000, only in that financial year, you can claim exemption for that amount.

Intestest will be taxable under the head Income from Other Sources in the year of receipt, if I am not wrong.

@VaibhavJ (Believe!! Live your dreams!) (33516 Points)
Replied 28 December 2012

Only interest which is accrued in last year will be taxed in the year of redemption.

Prior period interest which was accrued to you for which exemption is allowed automatically only issue will be in the case where you have already exhaused your limits u/s 80C.

I hope i have cleared your doubts.

Thanks!!