NSC Accrued interest

1531 views 2 replies

Under the Income Tax Act Individuals can compute their taxes either on cash basis or on accrual basis.

Still why is it that many people get into the process of computation of accrued interest on their NSC certificates held and take that into account while computing their yearly taxes?

They take accrued interest on NSC under the head - Income from other sources and show the same as deduction u/s 80C.

Is not it simpler to only show the interest earned during the year of maturity of NSC as income from
other sources in the year of maturity of NSC?
 

Replies (2)

The advantage is interest is spread over and therefore may not cross the upper ceiling limit of allowables u/s 80C in middle income group

Thank you  very much sir.

IF one opts for declaring NSC accrued interest every year till maturity, Should he also similary account FD interest assuming the FD period exceeds one year span?

In other words , can one follow Accrual method for NSC accrued interest and Cash method for FD interest?

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