Tax exemptions on PPFs, NSC and post office schemes

Comments (9)
  1. Anuj Agarwal says:

    I wanted to invest in 5yr NSC. Can you please tell me the tax implication of the interest earned.

    I have got mixed information from the internet regarding the same:
    # Somewhere it is mentioned that only the last years interest will be taxable and preceding 4 years will be tax free
    # And at some places it is mentioned that the entire interest received will be taxable

    Please help!

    Anuj Agarwal

    1. SP Intellect says:

      Hi Anuj,

      The interest amount on NSC is taxable as per your individual tax slabs. However you may choose upon paying such tax on the accrual basis every year or in the last year after receiving the maturity amount. Hope this clarifies.

      1. Anshudeep says:

        Hello SP Intellect,

        Please consider this example, suppose in my Income tax return (ITR) I am declaring the interest amount (under Other source of income) and then claim tax deduction for the same amount for 1-4 years. For the 5th Year (year of maturity of NSC) in my ITR I will declare the interest for 5th year and do not claim tax deduction for the same amount. Is this correct? If yes, that means I need to pay the tax only for 5th year interest right?

        Also, one more question regarding NSC, for the 1st year of NSC, in ITR I will be declaring NSC invested amount + interest earned for the same NSC under 80 tax deductions right and under “Income from other Source” only add the interest earned?

        Is it correct to say that except the year of investment (1st year of NSC), I can’t claim a tax deduction over the tax paid due to my salary using investment through NSC?




  3. Sharma Kv says:

    Whether interest in PPF a/c after maturity during 5 yr extended peirod (Without subscription)
    is exempt from income tax .

  4. Baig says:


    My father is 79 years old. Last year he has purchased NSC for Rs.1,00,000/- (Financial year 2014-15) and this year also he has purchased NSC for Rs.1,50,000/- (Financial year 2015-16). Is it mandatory to pay 8% income tax on the accrued interest or not. If mandatory, under what rule & section. Plz.give your valuable suggestion.

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