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Tax Query

Reena Verma (CA Finalist) (417 Points)

29 September 2010

HELLO FRIENDS,

I WANT TO KNOW THAT

IS INTEREST RECEIVED ON TAX-FREE GOVT. SECURITIES TAXABLE???

ACTUALLY WHEN I WAS SOLVING FULL FLEDGED INDIVIDUAL ASSESSMENT QUESTIONS, IT WAS FULLY TAXABLE IN THE SOLUTION.

PLZ CLARIFY.......

THANKS.......

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5 Replies

DT Fundas - Tarun rustagi ( Author) (1150 Points)
Replied 29 September 2010

dear reena

interest on govt. securities is taxable however there will be no deduction of tax on govt. securities but if securities are notified by the central govt. then interest will also exempt.

1 Like

k n v v s k sri kanth ( ) (564 Points)
Replied 29 September 2010

Any Tax Free Securities Bonds or Securities either from GOVT. / PVT. or any other are TAX FREE but the case is Interest earned on those are TAXABLE no matter even if the principal amount is TAX FREE but the interest is TAXABLE unless and until it is mentioned there that INTEREST IS TAX FREE....!!!

For example for REC Bonds, interest earned is TAXABLE and principle is used to get tax exemption of INCOME FROM CAPITAL GAINS ........!!!

1 Like

CA Pramod Jain (manager finance) (1577 Points)
Replied 29 September 2010

interest will be taxable

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Reena Verma (CA Finalist) (417 Points)
Replied 29 September 2010

THANK U ALL FOR UR VALUABLE RESPONSE......

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 29 September 2010

FOR CLAIMING EXEMPTION OF INTEREST, SECURITIES ON WHICH INTEREST IS RECEIVED MUST BE NOTIFIED BY THE CENTRAL GOVT. FOR THE PURPOSE OF SEC 10(15) OF THE INCOME TAX ACT.

REGARDS,

MANOJ

1 Like