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NSC Interest Taxable or Not

BINU.M.S (MCOM MBA ICWAI-Inter(Studying)) (197 Points)

09 November 2009

Dear Friends

Please tell me the interest on NSC is taxable or not?

Also

Bonus received form LIC is taxable or not?

Thanks In Advance

BINU.M.S

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17 Replies

VARUN (PCC STUDENT) (523 Points)
Replied 09 November 2009

firstly it will be added in ur income and then deduction for the same will be availed u/s 80c

with Regards

Varun Makhija

BINU.M.S (MCOM MBA ICWAI-Inter(Studying)) (197 Points)
Replied 09 November 2009

Please tell me if we withdraw the NSC interest then it will become taxable or not?

Sahil (CA FINAL) (182 Points)
Replied 09 November 2009

PLZ MAKE A NOTE

LAST YEAR NSC INTT. WOULD BE TAXABLE AS UR INCOME BCOZ IT IS NOT REINVESTED IN UR NSC AMOUNT & HENCE CANT CLAIM AS DED. U/S 80-C

Sahil (CA FINAL) (182 Points)
Replied 09 November 2009

BINUMS

U CANT WITHDRAW NSC INTT. IN CASH AS IT IS NOT PRACTICALLY FEASIBLE. HOWEVER IF U DISCOUNT NSC OR TAKE A LOAN AGAINST NSC ON WHICH U HAD CLAIM 80-C THEN THE AMOUNT OF DEDUCTION CLAIMED EARLIER BECOME TAXABLE INCOME FOR THE YEAR.

BINU.M.S (MCOM MBA ICWAI-Inter(Studying)) (197 Points)
Replied 09 November 2009

Let put it in this way

Case 1:Mr.A takes a NSC worth Rs.10000/-in the FY-2008-09.Say he got Rs.20 as interest in that FY 2008-09.Now is that NSC interest(Rs.20/-) taxable

Case 2:Mr.A receives Rs.500 as NSC interest for the FY 2009-10 for the NSC which is taken by him on FY 2008-09(ie,Rs.10000/-).Now Rs.500/- is taxable or not and why

(Guest)

NSC Interest is taxable. But under sec 80 C if interest in reinvested then you can claim deduction under this section. Usually NSC is for 6 years. You can't withdraw interest in mid. You will receive it only on maturity.

So answer for your question.

1. Whether NSC interest is taxable?

Yes. But deduction can be claimed under section 80 C.

2. What about withdrawn interest?

You can't withdraw interest in middle. You will withdraw it on maturity. Full interest is not taxable. Only last year interest is taxable. Because previous years interests, you would have already offered as income. So finally to conclude 6th year interest which is not reinvest is alone taxed on the year of receipt.

Every year you have to add the accrued interest to you income and deduct it under 80C,

(Guest)

Originally posted by :BINUMS
"

NSC interest is first included in computing income under the head other sources and then deduction of same is allowed U/s 80 C as it is deemed as reinvested except for 6 th year.

(Guest)

First of all confirm that the interest received is from NSC VIII which is now in force. Such interest is added to ur total income and is taxable because such interest is not reinvested...

mallela.ravikiran (learner) (136 Points)
Replied 10 November 2009

I agreed with Mr. Mahendra answer for interest.

and bonus received from LIC is also not taxable, it is exempted.

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 10 November 2009

NSC interest Taxable and LIC bonus not taxable u/s 10(10D)

CA BARKHA MITTAL (B.COM, CA) (149 Points)
Replied 10 November 2009

NSC Interest is taxable and amount invested during the year in NSC is elligible for deduction u/s 80C.

Sandeep Kasar (Service) (41 Points)
Replied 10 November 2009

As theNSC interest income is taxable and deduction can be calimed against such income, it is better not to show the income unless you are preparing the Balance sheet & P/L Account.

Best practice. Because the effect is one and the same.

Regards,

CA Sandeep Kasar

VIPUL (ARTICLE ASSITANT) (68 Points)
Replied 26 December 2009

it is not taxable, first you add NSC interest in your computation then after it is allowed as deduction under section 80c.Investment in NSC is also deductible under section 80c