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  1. No. Interest accrued in NSC is not exempted from tax.

    Edit: Yes, you can invest the accrued interest upto the limit of Rs. 100,000 in a f.y. to save the tax under section 80C. Otherwise interest accrued is taxable.

  2. Yes you can get exemption for accrued interest on NSC till fifth year. Sixth year interest will not qualify for tax exemption

  3. The accrued interest is taxable income in the year in which it is accrued.

    However, since the accrued interest is reinvested automatically, one can claim deduction u/s 80C for the accrued interest.

  4. 1.Interest Accrued on NSC is taxable under the head Income from Other Sources,
    2.Since the Interest Accrued is reinvested, you can Claim deduction u/s 80C of Indian Income Tax Act 1961 subject to max of Rs. 1Lakh

  5. You got tax benefit on amount invested in National Savings Certificate (NSC) for the Financial Year 2007-08.

    The interest from NSC is a taxable income whether it is accrueded during the investment period or at the time of maturity. So there is no question of getting tax exemption on that interest in following years.

    For getting tax benefit you have to invest as per your requirements every year. You will get tax benefit only on the invested amount in NSC.