Annual Information Statement – Interest on bonds & government securities (AIS)
The income tax department has newly introduced Annual Information Statement (AIS). AIS is likely to replace existing Form 26AS once the same is fully validated and operational. Accordingly, all the taxpayer is now required to grab more and more information about various information categories defined under AIS.
The present article deals with one such information category ‘interest on bonds and government securities’.
Page Contents
- Understanding referred interest on bonds and government securities-
- TDS provisions relating to interest on bonds and government securities-
- AIS information source for the category interest on bonds and government securities-
- AIS processing under the category interest on bonds and government securities-
Understanding referred interest on bonds and government securities-
In the present article, the interest on bonds and government securities referred is interest on specified bonds and government securities paid to a foreign institutional investor or a qualified foreign investor.
TDS provisions relating to interest on bonds and government securities-
1. As per provisions of section 194LD of the Income Tax Act, 1961, TDS is deductible on satisfying all the following criteria-
2. A person is paying interest on specified bonds and government securities. Bonds and securities are referred to under sub-section (2) of section 194LD.
Such interest is paid either to a Foreign Institutional Investor or a Qualified Foreign Investor.
On satisfying the above criteria, the person paying interest will be liable to deduct TDS @5% at the earlier of the following time-
- The credit of income; or
- Payment of income.
AIS information source for the category interest on bonds and government securities-
The person to deduct TDS under section 194LD is required to furnish details via TDS statement/ return in Form 27Q. Also, such deductor is liable to issue a TDS certificate to the deductee (i.e., Foreign Institutional Investor or a Qualified Foreign Investor) in Form 16A.
The details so provided by the deductor in Form 27Q will be taken up as a source of information under the category ‘Interest on bonds and government securities’ in AIS.
AIS processing under the category interest on bonds and government securities-
The information so captured by AIS will be reflected/ processed in the following way under AIS-
- Interest reflected by the deductor in Form 27Q will be taxable in the hands of the receiver (i.e., Foreign Institutional Investor or a Qualified Foreign Investor); and
- AIS will reflect the same under the head ‘Income from other sources’ in the receiver’s AIS.
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