I bought Kisan Vikas Patra in 2021 and plan to encash it in the current financial year after the lock-in period ends. I have reported the accrued interest in previous years’ income tax returns (ITRs). How should I show the interest income in my ITR to avoid double taxation on the interest, which will be paid at the time of encashment?
You will need to disclose only the interest accrued during the current year on the certificate and not the interest received on withdrawal as you have already offered the interest on accrual basis in the earlier years.
Also Read– SBI’s Special FD Scheme Ends On September 30, Check Interest Rate and Benefits Now
This interest will be taxed as income from other sources and will be disclosed in Schedule OS (other sources) in your income tax return.
Kisan Vikas Patra is a certificate saving scheme, which was initially intended for farmers but is now available for all resident Indian individuals and trusts. While the investment matures in 115 months, one can withdraw the balance, i.e. principal plus interest, up to the date of withdrawal, after a lock-in-period of 30 months.
An individual is permitted to offer to tax the interest as income from other sources either on accrual or cash basis, depending on the method followed for income from the same source.
Interest can be offered on accrual basis every year at the rate of interest regularly announced by the ministry of finance along with the rates for other savings scheme. The interest accrued on the investment is compounded and is not simple interest.
Furthermore, no TDS applies on the interest on Kisan Vikas Patra. Therefore, this income is not reflected in Form 26AS. However, the entire interest is generally disclosed in the annual information system of the taxpayer in the year of maturity or withdrawal.
Read More: This Bank Introduces EMI Option On UPI Payments: Here’s How To Use
Therefore, if one follows accrual method for taxing the interest and offers to tax the interest every year, there could be a mismatch in the year of maturity or withdrawal as the amount of interest in the AIS would be the entire interest on the investment, whereas the interest offered to tax during the year would be only the interest accrued during the year.
One would, also need to disagree with the information in the AIS and select the option “Information relates to other PAN/year” and then provide the details of the earlier years and the interest income from the investment offered in each of the earlier year in a separate row.
For more news like this visit Officenewz.com
