In 2024, x amount matured in PO KVPs, which I have not yet redeemed. However, these entries are still reflected in my AIS under interest from others: CPRC CHENNAI … it obviously doesn’t show up in 26AS…
I was chilled & getting ready to file my tax return till AIS dropped the bomb & now I am stressed about having to pay taxes on this ‘ghostmoney’ … I mean I don’t mind paying taxes when I actually redeem them and money hits my a/c
shouldn’t taxes be payable on redemption? I mean that is how i have handled it so far every year. I don’t want to add this and pay taxes on this now… Do i have an option to duck this new tax drama? @Quicko pl help
As per the Income Tax Act, the interest income earned from Kisan Vikas Patra (KVP) is considered taxable in the year in which the instrument matures, regardless of whether the investor chooses to redeem the amount immediately upon maturity or at a later date.
This is because the tax liability is based on the principle of income accrual rather than actual receipt.
Even though the interest is paid out as a lump sum along with the principal at the time of maturity, the entire interest amount is treated as accrued in the year of maturity and is therefore subject to tax in that financial year.