Taxability of Sardar Sarovar Narmada Nigam Ltd Bonds

This query is : Resolved

CA Mandar Joshi (Querist)
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15 June 2011 Sir,

one of our client had redeemed Sardar Sarovar Bonds in AY 2009-10. Bonds were redeemed for 2,00,000/-. The redemption was made by the govt before the due date. Bonds were purchased in secondary market.

the warrant shows the following details

Principal Amount -14,400/-
Interest Amount -1,85,600/-

also, in TDS column, it is mention as "NIL Exempt". What is the meaning of this?

What are the tax implications on the redemption of the Bonds?

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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15 June 2011 In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of section 10, the Central Government has specified the following bonds for the purposes of said item :

Provided that the benefit under the said item shall be admissible only if the holder of such bonds registers his name and the holding with the said corporation :

SO 953(E)
9-9-2002
Tax free Bonds Series -1B of rupees one lakh each, tax free Bonds Series -1B of rupees one lakh each, tax free bonds Series II-A of rupees ten thousand each and tax free Bonds Series IIB of rupees ten thousand each issued by SARDAR SAROVAR Narmada Nigam Limited carrying an interest of 9.20%, 9.50%, 9.20% and 9.50% per annum for a period of 5, 7, 5 and 7 years respectively for a total amount of rupees 500 crores with following details :

Series
Amount
Distinctive Number

1. I-A
Rupees seventy-five crores
1-7500

2. I-B
Rupees one hundred twenty-five crores
7501-20,000

3. II-A
Rupees one hundred twenty-five crores
20,001-1,45,000

4. II-B
Rupees one hundred seventy-five crores
1,45,001-3,20,000

if the bonds fall in above then interest is exempt

CA MANOJ GUPTA
JODHPUR
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