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Tax on debenture interest

veerkar (none) (43 Points)

01 July 2013

I purchase a debenture of face value of 1000 with a coupon rate of 12% pa and interest payment ( Rs 120 ) to be made on 1st Oct every year .The debentures were issued by the company in Sept 2011 for a tenor of 5 years. I purchase this on 1 Feb 2013 for Rs 1015 from secondary market on a stock exchange. I will receive my first interest payment of Rs 120 on 01/10/2013. What is my accrued interest I need to offer for tax in FY 2012-13, i.e Fin Year ending on 31/03/2013? Please also show the basis of calculations.

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(Guest)

Interest on debentures is taxable under Other Sources.

And as per the method of accounting of interest you can opt to be taxable on receipt basis. So whenever you receive such interest, the interest will be taxable and requried to disclose under return of Income.

And you don't need to disclose in return of income or anywhere what method you have adopted. Just make the interest into computation when it is received.