NSC & KVP Interest: Are You Filing ITR Correctly?
NSC and KVP both earn taxable interest, but only NSC gives a Section 80C deduction under the old tax regime. If you hold either, you must report the interest correctly in your ITR before 31 July 2025 to avoid notices.
NSC interest auto-reinvests every year — most investors forget to report it, then get a tax notice worth more than their chai budget for a year.
Miss this ITR deadline and your NSC/KVP interest goes unreported — inviting a tax notice
Key Takeaways
Check your NSC certificate(s) and calculate accrued interest year-by-year using the RBI/Post Office interest tables — report this under 'Income from Other Sources' in your ITR.
Claim the matching NSC accrued interest as a Section 80C deduction in Schedule VI-A (old regime only) — this effectively makes it tax-neutral until maturity.
For KVP, report the full interest accrued in FY 2024-25 in your ITR with no deduction offset — factor this into your advance tax or self-assessment tax payment before 31 July.
NSC and KVP both earn taxable interest, but only NSC gives a Section 80C deduction under the old tax regime. If you hold either, you must report the interest correctly in your ITR before 31 July 2025 to avoid notices.
Here's what happened: Interest earned on NSC and Kisan Vikas Patra (KVP) is fully taxable as 'Income from Other Sources' every financial year.. NSC interest is deemed to be reinvested each year, so it qualifies for Section 80C deduction under the old regime — up to the ₹1.5 lakh limit.. KVP offers no Section 80C benefit at all; the entire interest is taxable with zero deduction available under either tax regime..
What you should do: Check your NSC certificate(s) and calculate accrued interest year-by-year using the RBI/Post Office interest tables — report this under 'Income from Other Sources' in your ITR.. Claim the matching NSC accrued interest as a Section 80C deduction in Schedule VI-A (old regime only) — this effectively makes it tax-neutral until maturity.. For KVP, report the full interest accrued in FY 2024-25 in your ITR with no deduction offset — factor this into your advance tax or self-assessment tax payment before 31 July..
NSC interest in the final (maturity) year is taxable but NOT eligible for 80C deduction — many investors miss this and under-pay tax, triggering a notice later.
For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.
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This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.