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Ncd tds

meabhijit (Project Manager) (172 Points)

28 December 2012

Hi,

In the case of debentures (NCDs), interest income up to Rs 5000 is exempt from tax deduction. Any interest earned above this limit will be subject to TDS at 10%.

With the above I assume that no TDS will be deducted till 5000Rs and hence tax credit form 26AS will not indicate the same. Is there any other method/way (like 26AS entry) wherein such a interest earned against the NCD indicated by issuer for facilitating IT return creation?

Thanks in advance.

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Anand (CA - Assistant General Manager - Taxation) (1606 Points)
Replied 28 December 2012

If tax is not deducted on interest payment there will not be any entry in 26AS. The other methods to be adopted a) Bank Summary to identify such transactions b) Correlated with the interest payment advice c) Alternatively write to the R&T agent or the company issuing debetntures to provide a statement of the same.

meabhijit (Project Manager) (172 Points)
Replied 28 December 2012

Thanks Anand.

So essentially advice/statement is the only way to determine such interest incase of no TDS. Any idea how the issuing company OR R&T agent informs the IT dept for the interest paid to the NCD holder (since no TDS has been deducted?). This would be needed to cross check the filed IT return is appropriate or not.

Anand (CA - Assistant General Manager - Taxation) (1606 Points)
Replied 28 December 2012

You are welcome Abhijit

I think that they do not inform the amount of interest paid to the concerned holders.

They would be reporting to IT Department only if TDS is deducted on the same

However, they are required to report receipt of Rs. 5 Lakhs or more from any person under Section 285BA r.w. Rule 114E. i.e at the time of allotment of bond (Annual Information Return)

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meabhijit (Project Manager) (172 Points)
Replied 28 December 2012

Thanks Anand.

meabhijit (Project Manager) (172 Points)
Replied 05 February 2013

Anand,

Is the same applicable to Company fixed deposits? Meaning, they do not report the TDS or its entry in 26AS?

I saw one 26AS wherein Oriental Bank (OBC) has indicated interest paid for fixed deposit in 26AS but indicated that no TDS has been deducted. So basically, the information of how much interest was paid is available via 26AS for OBC bank.

What do Company deposit follow?

Thanks in advance.