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Thread: NSC - Interest earned is tax free or not?

  1. #1
    PolicyWala Newbie
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    Default NSC - Interest earned is tax free or not?

    Hi, Just wanted to know If I invest Rs.100/-. As far as I know, I will be getting 8% interest on NSC. And the term is 6 years and interest will be compounded every 6 months. I am having doubt -
    1- Whether the interest earned is tax free or not?
    2- Can you please clarify me on that?

    3- Is Minimum term of certificate 6 yrs?



  2. #2
    PolicyWala Newbie
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    NSC gives 8% PA compounded twice a year. This means Rs. 100 will give you Rs. 160.1032 at the end of the tenure. You can use this to extrapolate to all denominations!

    The formula is: Final value = Principal * ( ( 1 (interest rate / number of times interest is compounded)) ^ ( period in years * number of times interest is compounded))
    For example: Final value = 100 * ((1 (0.08 / 2))^(6*2)

  3. #3
    PolicyWala Newbie
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    Quote Originally Posted by Kunal View Post
    1- Whether the interest earned is tax free or not?
    2- Can you please clarify me on that?
    3- Is Minimum term of certificate 6 yrs?
    - Yes, Income tax relief is also available on the interest earned as per limits fixed vied section 80C.
    - Period of maturity of a certificate is six Years.
    2- Can you please clarify me on that
    I think it is with first query.


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