What is the tax rate on the interest earned from bonds | Vested

What is the tax rate on the interest earned from bonds?

Interest Income from Bonds

Interest earned on bonds is generally taxable as part of an individual's total income and taxed according to their income tax slab. For instance, if Mr. Anuj invests Rs. 10,00,000 in a taxable bond yielding 15% annually, his interest income of Rs. 1,50,000 will be added to his overall income and taxed accordingly.

Tax Deducted at Source (TDS) on Bond Interest

  • Corporate bonds: A 10% TDS is applicable on interest earned from bonds issued by companies for individuals, Hindu Undivided Families (HUFs), and other entities.

  • Government bonds:

    • Sovereign gold bonds are exempt from TDS.

    • As per Budget 2024, starting October 1, 2024, a 10% TDS will be imposed on interest from government securities (including Floating Rate Savings Bonds) if the annual interest income exceeds Rs. 10,000.




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