The article is misguiding with regards to interest accrued on NSC, where it is said that interest on NSC is taxable. Interest accrued on NSC which is deemed to be reinvested is eligible for deduction under 80C for the first five years.
Educative. Please clarify if a person ends to his wife 10lakhs at 1%p.a to his wife and she inturns invests in Goi bonds, whether the interest income on bonds will be clubbed to the income of husbasnd
The Budget 2005 has not only brought in the concept of EET ( as against both EEE and EET prevailing earlier for different schemes). As Dr Garg has rightly pointed out EET is nothing but deferment of taxes. I suppose we will have to live with that. I only hope that the amounts deposited by all of us till 31 st march 2005 under the "the then" EET are not taxed by FM when withdrawn by us hereafter after the respective lock ins. And unless all taxpayers make a big noise , I am sure this is bound to happen. I am saying this based on the experience of current years budge with reference to honest tax payers who are in receipt of pension. Let me explain Till alst year a senior Citizen whose income comprised of Pension and Bank interst was eligible to get deductions under section 80-L ( Rs 15000/-), under section 80-B( Rs 20000-for Senior Citizen), Standard Deducion-Rs30000/-. Thus his toptal income upto Rs 198,333 was totally tax free if its source was pension of not less than Rs100,000 and bank and Govt securites interest income of not less than Rs12,000 and Rs3000 respectively. Now fro the same level of income and from sa,me sources, he /she will be paying tax of Rs. 2666.6
Sir, I am not a tax expert but articles like yours add to our knowledge. You have given the tax laws in simple language understood by people like us. But I have developed a doubt. To me section 80-C seems to be an EET (exempt exempt tax)which means FM has deceived the people because it is not tax exemption it is simply tax defferment because whenever you withdraw from your savings it adds to your income and is taxable. But I see a glaing disparity in 80-C. If you save and when withdraw you pay tax. But if you repay house loan, you get tax exemption. You don't have to withdraw it like savings. So it is big discrimination. Kindly bring it the notice of concerned authorities to make savings under section 80-C also EEE (exempt, exempt exempt)to bring the savers at par with loanees.
I am of the opinion that interest accrued on NSCs purchased during earlier years till maturity is to be treated as "Income from other source" and likewise the said amount should also be treated as fresh amount reinvested in NSC during the respective financial year under the new Section 88C now introduced. In other words the accrued interest on NSC should also be treated as investment U/S 88C with a over all limit of Rs.1.00 lac, besides treating the same as "Income from other source". Please clarify
