At present, Tax Saving FDR is allowed as deduction u/s 80C but its interest is taxable.

It is pertinent to note that the deduction u/s 80C on reinvestment of interest on NSC is available.


It is suggested that in the case of cumulative deposits, the amount of annual interest accruing may be deemed to have been reinvested for the purpose of deduction under section 80C.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)
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