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Tax treatment of investment in NSC certificates

National saving certificates are issued by  department of post. It is very safe way of investment. It does not give you safety from inflation but when inflation rate is lower than interest rate, it can give you benefit. It also helps you to save tax .  Who can buy NSC? Only residential individual can buy NSC. Joint account is also available. NSC can be purchased for minimum Rs. 100.The investment can be for denomination  of Rs. 100, Rs. 500, Rs. 1000 and Rs. 5000. Tax treatment: Deduction u/s 80C is available for invested amount.  When interest is accrued to NSC, deduction u/s 80C is available for it also. You should show the interest in NSC in the income tax head – income from other sources and claim deduction u/s 80C. But the total deduction for invested amount and interest accrued should not be more than Rs. 1,00,000 because The maximum deduction allowed u/s 80C is Rs. 1,00,000. So if you have invested Rs. 1,00,000 in NSC, whole interest accrued is taxable. When the term of NSC ends, you will get principal amount with interest. At that time, principal amount is not taxable because it is your capital which is returned to you. But interest amount will be taxable. year NSC purchased Other investment u/s 80C Interest accrued Maturity of NSC with interest Deduction u/s 80C Taxable amount 2011-12 80,000...

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ExemptionsFollowing educational services are exempt. Pre school educational and education up to higher secondary school or equivalent Education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force. Recognized by law meaning:It means recognized by any university (under UGC act) .If private centers recognized by university, the services will be exempt.In CCE vs. Tandem Integrated services , center provide coaching to students who appear for university examination.After completion  of coaching , fees are shared with university. It has held that services will be exempt.  Approved vocational educational course: Approved courses means courses run by an industrial training institute or an industrial training center affiliated to National council for vocational training.A course run by NSDC set up by the government will be subject to service tax. with effect from 10/5/2013. Transport services provided by school to students are exempt because it is naturally bundled service. services of training in the field of arts,culture or sports are exempt. as per Sr. no. 8 Notification No 25/2012. International schools and boarding schools giving international certificate like IB up to HSC and boarding schools are also exempt. Taxable services: Private coaching Placement services Postal coaching  online coaching Exemption to auxiliary services: services provided  to an educational institutions by way of  Auxiliary services  Renting of immovable property services  are exempt from service tax.Sr no 9...

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