Is NSC interest exempt from tax?

NSC comes with a fixed maturity period of five years. There is no maximum limit on the purchase of NSCs, but only investments of up to Rs. 1.5 lakh can earn you a tax break under Section 80C of the Income Tax Act. The certificates earn a fixed interest, which is currently at a rate of 6.8\% per annum.

How is tax paid on NSC interest?

In case you have exhausted your limit of deduction under section 80C than the interest earned would be taxed and it won’t be reinvested. However, the interest earned on the investment in the last year is not tax-free since it can’t be added in the principal and is filed under ‘Income from other sources’.

How can I add NSC interest in income tax?

So, the interest is to be calculated for the first period, add it to the total and then calculate the interest for the next period. Let me explain with an example. If you invest Rs 1,0000 in NSC, your interest is Rs 810 (10000 x 8.1\%). However, your principal amount for a second year is Rs 10,810 (Rs 10,000 + 810).

Which is good PPF or NSC?

As far as the interest is concerned, PPF interest is tax-free, whereas, NSC interest is taxable and will be added to your taxable income. However, the interest in NSC is also eligible for deduction under Section 80C of the Income Tax Act. It is better to pay tax on the accrued interest annually rather than on maturity.

Does NSC Change Interest?

As per the ministry circular, PPF will continue to earn 7.10\%, the NSC will fetch 6.8\%, and Post Office Monthly Income Scheme Account will earn 6.6\%….Read more news on.

How is Interest calculated on NSC?

The interest on NSC is 6.8\% for the current quarter. The interest rate for NSC is announced by the Ministry of Finance every quarter. Returns from NSC are guaranteed, and it is compounded annually and paid at the time of maturity.