Query

it is taxable

but d same can be claimed as deduction under 80C if

1. the limit of 100000 is not expired and

2. the company follows accrual system of accounting

The capital investment in N.S.C.s qualifies for rebate u/s 80C in the first year of investment.

• Thereafter (after completion of one year) for the next 5 years the annually accrued interest on N.S.C.s is eligible for rebate u/s 80C as it is considered reinvested in N.S.C.s

• Also this annually accrued interest is taxable on an accrual basis every year under the head ‘Income from Other Sources’.

• If the accrued interest is not taxed every year on an accrual basis than the entire income becomes taxable during maturity / withdrawal. 

Thanks a lot.............