Multiple choice general knowledge

Intrest on NSC is taxable or taxfree.

  1. Taxable

  2. Tax Free

  3. 50% Amount Taxable

  4. 75% Amount Taxable
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A Correct answer
Explanation

Interest earned on National Savings Certificate (NSC) is fully taxable as 'Income from Other Sources' under the Income Tax Act. However, the interest earned each year is deemed to be reinvested and qualifies for deduction under Section 80C, effectively providing tax relief on the interest component. Only the interest portion that is not reinvested would be fully taxable. The principal amount invested in NSC already gets Section 80C deduction.

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