Union Budget 2018- Tax deduction at source on 7.75% GOI Savings (Taxable) Bonds, 2018
Government of India introduced 8% Savings (Taxable) Bonds, 2003 in 2003. Under the existing law, the interest received by the investor is taxable. Further the payer is liable to deduct tax at source under section 193 of the Act at the time of payment or credit of such interest in excess of rupees ten thousand to a resident.
Government has now decided to discontinue the existing 8% Savings (Taxable) Bonds, 2003 with a new 7.75% GOI Savings (Taxable) Bonds, 2018. The interest received under the new bonds will continue to be taxed as in the case of the earlier once. The provisions of section 193 are proposed to be amended to allow for deduction of tax at source at the time of making payment of interest on such bonds to residents. However, no TDS will be deducted if the amount of interest is less than or equal to ten thousand rupees during the financial year.
This amendment will take effect from 1st April, 2018.
Extract of Clause 46 of Finance Bill 2018
Clause 46 of the Bill seeks to amend section 193 of the Income-tax Act relating to interest on securities.
It is proposed to amend the proviso to clause (iv) of the said section to provide that the person responsible for paying to a resident any interest on 7.75% Savings (Taxable) Bonds, 2018 shall deduct income-tax, if the interest payable on such bonds exceeds ten thousand rupees during the financial year.
This amendment will take effect from 1st April, 2018.
[Clause 46]
Respected sir, I am a housewife and filing my income tax return for the interest income. I last year received an amount MY DAUGHTER BEING THE
PROCEEDS OF COLOSURE OF HER PPF ACCOUNT and I invested the said amount in Government of India – 7.75% savings (taxable)
Bonds 2018 – cumulative – with HDFC Bank on 07/05/2020 to be
fully matured on 07/05/2027.
It has been informed by the HDFC Bank that they do not issue the TDS certificate on accruel basis and TDS would be deducted only at the time of maturity.
I do not have taxable income and in case I consider my total income as maturity amount I would be put into a very big taxable SLAB and whole my savings would be eroded.
My query is that can i show the interest calculating the interest at the rate of 7.5% per annum every year? Then there would be a mis match at the time of 2027 when the income is shown by the bank with whole amount on maturity.
Further, if i wait for the last year I will fall in the basket to pay very high income tax and my whole savings would be eroded.
CAN I CALCULATE EVERY YEAR AND MAKE PAYMENT OF TAX IF ANY..WITHOUT WAITING FOR THE FINAL YEAR? AND DURING THE LAST YEAR CLAIM REFUND?
Kindly help suggesting how to go further for which I would be grateful at all times.
Kindy do reply on interest of natural justice. Please consider my request on humanitarian grounds.
Thanks a lot sir,
Yours faithfully,
NALINI V.M.
Hi Nalini Ji
what happened in your case of accrued interest in 7.75% GoI bonds, did you show your accrued interest every year or just waiting for closure proceeds?
I am also in similar situation and my bank also didn’t show accrued interest and I didn’t notice it. Now I am also worried for same.
Dear sir, I have invested in – Government of India – 7.75% savings (taxable)
Bonds 2018 – cumulative – with HDFC Bank Limited, under scheme cumulative dated 07/05/2020 to be
fully matured on 07/05/2027. I was not aware that the HDFC BANK DO NOT DEDUCT TDS EVERY YEAR AND THE SAME IS DEDUCTED ON MATURITY AT THE END OF THE PERIOD. IN CASE I SHOW THE INTEREST ENTIRELY ON MATURITY THE EARNINGS WOULD BE HUGE AND WHOLE MY SAVINGS WOULD BE ERODED. RESPECTED SIR, KINDLY ADVISE ME A WAY OUT. I WOULD BE GRATEFUL TO YOU AT ALL TIMES. I FILE TAX RETURN FOR THE LAST 3 YEARS THOUGH I AM A HOUSEWIFE AND DO NOT HAVE ANY TAXABLE INCOME. KINDLY HELP …HELP. V M NALINI.
TDS will be deducted on actual payment of interest. So is advisable to include whole interest amount at the time of receipt.
Question: If a taxpayer is in 30% bracket and has invested in these 7.75% bonds with cumulative option, does she need to include the accrued interest in her total income every year before the maturity, and pay tax on it every year? Or can she wait till the cumulative interest is actually paid and include that cumulative interest in the 7th year only?
show and calculate every year
if u not show every year your income zoom in 7th year of maturity and 8th year big mismatch will show in your books attract notice U/S 139(9)
if u not show every year your income zoom in 7th year of maturity and 8th year big mismatch will show in your books attract notice U/S 139(9)