Starting from April 1st, 2023, Govt has started levying TDS of 10% on listed NCDs under section 193 of the Income Tax Act, 1961
The TDS is levied irrespective of interest amount and will form part of Income from other sources and one can take a refund while filing ITR.
Rationale as per my interpretation:
As the government’s intention is to take 10% TDS from the entire interest that the company is going to pay (1-time interest settlement at maturity),
TDS will always be charged on the entire interest amount for cumulative interest bonds.
In this case, from @Aditya_Gupta’s perspective, He made a total return of 8.79% for 5 months and 5 days, Govt should have deducted 0.879% ideally (13.63 Rs but has deducted 68.26 rs)
While he can claim the refund for the excess TDS amount of 55 rs or even the entire 68.26 rs if he doesn’t fall under any tax bracket while filing his ITR, If he falls under the 30% tax bracket, 30% of 136.26 ( 40.87 rs) is his tax liability and he can then claim a refund of 14 odd rupees in that case.
The only caveat in this whole scenario is that it will be tough for his CA and especially Govt to differentiate between his interest income and short-term capital gain/loss as it involves a lot of tax-based calculations and assumptions
Therefore, Govt simplified it by charging 10% upfront on the entire interest amount, and any amount that the investors want a refund for shall only be done only after properly filing tax returns.
Sir, I have only 1 NCD/Bond company on my PAN. Total interest income from Bonds is below Rs2000. Can company deduct 10% TDS on interest?
i haven’t sold any qty of bond till now.
thank you for reply. NCD company has already deducted 10% TDS on interest. Can I submit 15G form now?
I would like you to take a look at this document. Amendment on 1april 2023 for NCD/Bonds doesn’t mention Rs5000 threshold limit. check this
letter from L&t Finance have mentioned about 5000 threshold limit. there is some confusion. i wasn’t able to find official notice from IT Department on internet. how can we confirm this?
I have read about the 5k threshold so wrote… But I could be wrong… Apologies!
No point in submitting 15g now… If you have paid more taxes (excess TDS deducted) than your actual liability, you can claim a refund for the excess amount when you file your tax return.
Excerpt from the Income Tax Act on TDS for interest on securities
Interest on securities.
** Sec 193.** The person responsible for paying to a resident any income by way of interest on securities shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax at the rates in force on the amount of the interest payable :
Provided that no tax shall be deducted from—
Clause (v)
any interest payable to an individual or a Hindu undivided family, who is resident in India, on any debenture issued by a company in which the public are substantially interested, if—
(a) the amount of interest or, as the case may be, the aggregate amount of such interest paid or likely to be paid on such debenture during the financial year by the company to such individual or Hindu undivided family does not exceed five thousand rupees; and
(b) such interest is paid by the company by an account payee cheque;
