1) The National
Savings Certificate (NSC) is eligible for tax deduction under Section 80C for
an investment of up to Rs 1 lakh. One can invest in five- or 10-year NSCs.
2) The
interest on the NSC is fixed in April every year. The current rate is 8.5% for
five years, and 8.8% for 10 years.
3) The interest
accumulated every year can be deducted from Rs 1 lakh investible in that year
for saving tax, as it is considered to be invested for this purpose.
4) The
interest is taxable, but since it can be reinvested as part of Section 80C
investment, it makes NSC an attractive option.
5) Investors have to
keep an account of the interest received each year and ensure that the overall
investment, including the interest, is in the Rs 1 lakh limit.
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