Can I claim any rebate for interest received for multiple years in current year? | Mint
Source: Live Mint
I had invested in bonds of a listed Company with a cumulative option for interest. These bonds were redeemed on 15th July 2024. I have received the redemption money of 1 lakh with interest of ₹67,595/-towards interest after deducting TDS of ₹7,511/-. I have not shown any interest income regarding these bonds in the past. My question is whether the whole amount of ₹75106 (67595+7511) will be included in my income for this year or is any relief available to me for interest received for so many years together?
Answer: Income must be offered for tax under any of the five heads of income specified under the Income Tax Act. Interest income is generally taxable under the head ‘Income from other Sources”. Taxpayers are permitted to offer their income under one of the two methods permitted in respect of income under two heads of Income, i.e. “Profits and Gains of Business or Profession” and “Income from other Sources”.
Taxation of Interest Income: Accrual vs. Cash Basis Explained
The first method is “accrual basis,” under which you offer the income for taxation as and when the right to receive such income accrues to you. The other is to provide it on a“Cash basis,” where the income is offered for tax in the year it is received. Once a particular method is opted for, it has to be followed consistently year after year.
Since you have not offered interest income for tax on an accrual basis every year in the past, you will have to offer the entire interest income, including the amount of tax deducted for taxation during the year of receipt, i.e., the current year.
Though there is a provision under Section 89 for granting relief in case a salary for more than twelve months is received in one year, whether in advance or in arrear, there is no similar provision for granting relief in case of income like interest. So, you have no option but to include the whole of the interest in the current year’s income and pay tax at the slab rates applicable to you.
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Balwant Jain is a tax and investment expert and can be reached on jainbalwant@gmail.com and @jainbalwant his X handle.
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