TDS on GOI bond interest: How to avoid double tax?
These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.
I had purchased GOI Savings Bonds issued by the RBI in 2018. These bonds carried a fixed interest rate of 7.75% per annum. I reported accrued interest yearly in my ITRs using the accrual method, though it never appeared in Form 26AS. The bonds matured in May 2025, and RBI deducted TDS on the full 7-year interest, making it appear as income for one year. Without documents to show yearly accruals, how can I explain this to the tax authorities?
Amit Maheshwari, Tax Partner, AKM Global: In your case, a discrepancy arises with your past Income Tax returns where this income was earlier offered to tax on accrual basis. Claiming the full TDS credit in 2025-26 without reporting the corresponding income in the same year could result in your return being flagged as defective or trigger tax scrutiny. To address this issue and prevent potential double taxation, the Central Board of Direct Taxes (CBDT) has provided remedy through Form 71. This form allows a taxpayer to align the credit for TDS with the respective assessment years in which the corresponding income was offered to tax. You must file Form 71 electronically via the Income Tax portal within two years from the end of the financial year in which the TDS was deducted before the Jurisdictional Assessing Officer (JAO). It is imperative to proactively compile supporting documentation to substantiate your position. This should include a detailed year-wise working sheet of the accrued interest offered to tax, along with copies of the relevant ITR acknowledgments.
Also read | I am 44 with salary, FD interest and mutual fund gains. How do I decide between the old and new tax regime each year?
I made a donation of Rs 50,000 to a village temple committee for repairing an old temple. However, the temple is not registered with the Income-tax Department, and the receipt provided does not include a PAN or registration number. How can I claim tax exemption for this donation?
Umesh Kumar Jethani Founder, ApkiReturn: To claim tax exemption for your donation, the temple needs to be registered with the Income-tax Department and must provide a receipt with its PAN and registration number under Section 80G. Since the temple you donated to isn’t registered and the receipt doesn’t include these details, unfortunately, you cannot claim tax exemption for this donation as per the income-tax laws. For future donations, you could suggest to the temple committee to consider getting itself registered under Section 80G to allow donors to claim tax exemptions.
Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
I had purchased GOI Savings Bonds issued by the RBI in 2018. These bonds carried a fixed interest rate of 7.75% per annum. I reported accrued interest yearly in my ITRs using the accrual method, though it never appeared in Form 26AS. The bonds matured in May 2025, and RBI deducted TDS on the full 7-year interest, making it appear as income for one year. Without documents to show yearly accruals, how can I explain this to the tax authorities?
Amit Maheshwari, Tax Partner, AKM Global: In your case, a discrepancy arises with your past Income Tax returns where this income was earlier offered to tax on accrual basis. Claiming the full TDS credit in 2025-26 without reporting the corresponding income in the same year could result in your return being flagged as defective or trigger tax scrutiny. To address this issue and prevent potential double taxation, the Central Board of Direct Taxes (CBDT) has provided remedy through Form 71. This form allows a taxpayer to align the credit for TDS with the respective assessment years in which the corresponding income was offered to tax. You must file Form 71 electronically via the Income Tax portal within two years from the end of the financial year in which the TDS was deducted before the Jurisdictional Assessing Officer (JAO). It is imperative to proactively compile supporting documentation to substantiate your position. This should include a detailed year-wise working sheet of the accrued interest offered to tax, along with copies of the relevant ITR acknowledgments.
Also read | I am 44 with salary, FD interest and mutual fund gains. How do I decide between the old and new tax regime each year?
I made a donation of Rs 50,000 to a village temple committee for repairing an old temple. However, the temple is not registered with the Income-tax Department, and the receipt provided does not include a PAN or registration number. How can I claim tax exemption for this donation?
Umesh Kumar Jethani Founder, ApkiReturn: To claim tax exemption for your donation, the temple needs to be registered with the Income-tax Department and must provide a receipt with its PAN and registration number under Section 80G. Since the temple you donated to isn’t registered and the receipt doesn’t include these details, unfortunately, you cannot claim tax exemption for this donation as per the income-tax laws. For future donations, you could suggest to the temple committee to consider getting itself registered under Section 80G to allow donors to claim tax exemptions.
Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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