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Tax Expert - Answered on Aug 23, 2022

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more

Question by Deepak on Aug 23, 2022Hindi

Dear Sir, invested Rs 20000 in long term infrastructure bonds in the year 2011 for a period of 10 years under cumulative option. The bonds matured in Dec 2021 and I received Rs 44,624 after deduction of TDS of Rs 2,736. An amount of Rs 27,360 is being shown in my AIS as income from other sources.

I have been showing the interest accrued every year on this investment in my IT return for the past 10 years as interest income. However now this year I am again required to show the lump sum amount as income and pay tax on it since it is being reflected in my AIS and 26 AS.

IS THERE ANY WAY THAT I DON'T HAVE TO PAY DOUBLE TAX since I have already paid tax as accrued interest over past 10 years? How to reflect same while filing IT? I have filed ITR 2.

Ans: As per income tax provisions, interest income can be offered on accrual basis (i.e. interest earned but receivable at later stage) or cash basis. But once you start offering income under one method, you cannot change.

In your case, Rs 24,624 is interest earned during tenure of 10 years. If you have offered interest income every year (even if not received) for FY 21-22, you have to offer interest earned between April 1, 2021 and maturity date of December 21.

Amount offered in Income Tax Return can differ from amount appearing in AIS, if income is offered correctly as per Income Tax provisions and appropriate reply should be filed in AIS feedback option.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.

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Question by Satish - Jan 04, 2022Hindi

I have two queries. (a) After seven years, I received an L&T Infrastructure bond maturity amount of Rs 44,400. When I initially applied for these bonds, I submitted my PAN, still no TDS was mentioned. Is this complete amount included as additional income in my tax return? (b) Annually, Rs 715 as gold bonds interest is credited to my saving bank account. In my IT return, I include 4*quarterly interest amount as income. Saving bank interest on Rs 715 is also included in the quarterly interest. Am I to include, separately, a sum of Rs 715 in my yearly income for income tax purposes?

Ans: Here are the responses:

(a) The interest on the bonds is taxable in the hands of investors.

The full maturity amount is not taxable.

You need to reduce the invested amount to arrive at the interest you have received and you would need to pay tax on this interest received.

(b) The interest on gold bonds is taxable and hence you need to show this in your returns.

The saving account interest is to be shown separately as it attracts deduction under section 80TTA for upto Rs 10,000 and you would need to pay taxes only if it crosses this limit.

In summary, you need to show both the interest on gold bonds and the savings account interest, but separately and after claiming the deduction above for savings bank interest.

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Question by Deepak - Sep 09, 2022Hindi

Dear Sir, 1. I invested Rs 20000 in long term infrastructure bonds in the year 2011 for a period of 10 years under cumulative option. The bonds matured in Dec 2021 and I received Rs 44624 after deduction of TDS of Rs 2736. An amount of Rs 27360 is being shown in my AIS as income from other sources. 2. I have been showing the interest accrued every year on this investment in my IT return for the past 10 years as interest income. However now this year I am again required to show the lump sum amount as income and pay tax on it since it is being reflected in my AIS and 26 AS. 3. IS THERE ANY WAY THAT I DON'T HAVE TO PAY DOUBLE TAX since I have already paid tax as accrued interest over past 10 years? How to reflect same while filing IT. I have filed ITR 2.

Ans: If Interest Income is already offered to tax on accrual basis, it will not be taxed again on receipt basis. You can provide feedback against AIS accordingly and no need to offer the same income again.

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