Income Type for interest from government bonds

This query is : Resolved

Quick Summary

Interest earned from government bonds and bills purchased through the RBI's Retail Direct platform is generally considered 'Income from Other Sources', similar to Fixed Deposits. This applies to the difference between the purchase price (often at a discount) and the maturity value. Capital gains typically only arise if the bond is sold in the market before maturity.

Akshit Jain

Akshit Jain (Querist)
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01 November 2024 Is interest earned from government bonds/bills invested through the RBI's retail direct platform considered "Income from Other Sources'" like FDs?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2024 Yes, unless specified as capital gains.

Akshit Jain

Akshit Jain (Querist)
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01 November 2024 On the RBI retail platform, a retail investor can buy 90/180/365 days treasury bills at a discount, and they mature at par, the difference being the interest earned. For example, T-bill bought at 98 would mature at 100. Would this difference be deemed as "Capital Gain" or "Income from other sources"? I suppose capital gain/loss would arise only when the bond is sold in the market.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2024 Correct. It can be declared u/h. IFOS.

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