My investments in NSC matured a month ago. Can I claim the tax deduction under Section 80C this year?
Investment made by an individual towards purchase of an NSC qualifies for deduction under Section 80C. The maximum amount that can be claimed as a deduction under this Section is Rs 1 lakh. The interest on the NSC, except in the fifth year (in case of the NSC with 5 year tenure), is not paid but credited to the investor’s account. So, the interest that accumulates is treated as invested in NSC. Hence, the accumulated interest also qualifies for an exemption under Section 80C for the four years in an NSC with five year tenure. In the last year, the entire amount is handed over to the investor, including the interest for the fifth year and, hence, does not qualify for a deduction. Therefore, this year, you will not get deduction on account of reinvestment of interest amount.
