What is the treatment of NSC interest?

[samir]

I wanted to know that what is the treatment of NSC interest?
I have purchased Rs 60,000 NSC last year. Do I have to show the interest while filling the income tax and Do I get any benefit in 80C.

[Vivek]

Whatever interest in earned in a year gets reinvested with in initial principal within the same NSC investment. The entire interest earned for the entire period of 5 years qualifies for deduction under section 80c at the end of the term or at the time of maturity.

The above accrued interest should be shown as interest income under the head ‘income from other sources’. Then it should be claimed as deduction under section 80c.

Source -PW.com (http://www.policywala.com/forum/showthread.php/3064-Will-there-be-any-tax-deduction-on-matured-National-Savings-Certificate-%28NSC%29)