Tax on nsc

Hi

Greetings!

I'm a newbee to this forum, feels good to be a part of it

 

I first query: i got this details from Money Control Website on NSC

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National Savings Certificate (NSC)

Salient Features:

NSC VIII Issue - Rs. 100/- grows to Rs. 150.90 after 5 years.

NSC IX Issue - Rs. 100/- grows to Rs. 234.35 after 10 years.

Minimum investment Rs. 100/-. No maximum limit for investment.

No tax deduction at source.

Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under NSC - section 80C of IT Act.

Certificates can be kept as collateral security to get loan from banks.

Trust and HUF cannot invest.

A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.

The interest accruing annually but deemed to be reinvested will also qualify for deduction under NSC - section 80C of IT Act.

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I am not able to understand the following points, kindly share your views on this

1. No tax deduction at source.

 

2. Investment up to Rs 1,00,000/- per annum qualifies for Income Tax Rebate under NSC - section 80C of IT Act.

 

3. The interest accruing annually but deemed to be reinvested will also qualify for deduction under NSC - section 80C of IT Act.

 

What is the amount of deduction from the interest occured say for ex: Rs. 150.90 after 5 years or what percentage is taxable? And, how should get tax benefits on this?

What if I invest 2000 PM in NSC, even then is there is any tax during withdrawls? In general what is tax percentage during withdrawals on NSC, bank fixed deposits and PPF?

 

waiting for your reply.

 

 

Replies (1)

Dear Rahul,

 

            As per your query :-

1. TDS is not deducted on investmnent in NSC.

2. Exemption limit U/s 80C is up to 100000/- currently. So if you purchase a NSC for rs. 200000/- u will get exemption for Rs. 100000/- only. The Balance amount will be taxable as per your tax slab.

3. Interest is to be calculated annualy and the exemption for the same shall be taken U/s 80C for the preceding financial year. 

 

Now, if you purchase NSC for Rs. 2000/- then on the 1st year of your investment u may enjoy the exemption for Rs. 2000/- only U/s 80C. From the next financial year the interest accured on NSC shall be eligable for exemption U/c 80C.

 

Hope to solve your query.

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