Skip to content

NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Debt Products

Caselet: Anita, a resident individual, holds a taxable bond on which interest of Rs 1,20,000 is paid annually by an Indian company, paid in the form of account payee transfer. Assume TDS on such interest is at 10% where the threshold is exceeded, and Anita's slab rate is 20% (ignore surcharge and cess). She also has Rs 15,000 of bank savings interest, taxed at slab rate with no deduction claimed. What is her additional tax payable on these two items after adjusting the TDS on the bond interest?

Total interest of Rs 1,35,000 is taxed at 20%, giving Rs 27,000. Credit for Rs 12,000 TDS deducted on the bond interest leaves Rs 15,000 still payable by Anita.

  1. ARs 15,000Correct
  2. BRs 12,000
  3. CRs 3,000
  4. DRs 27,000

Explanation

Total interest = 1,20,000 + 15,000 = Rs 1,35,000; tax at 20% = Rs 27,000. TDS on bond interest = 10% of 1,20,000 = Rs 12,000. Balance payable = 27,000 − 12,000 = Rs 15,000. Rs 27,000 ignores TDS credit; Rs 12,000 is the TDS itself.

Did you get it right without looking?

One question tells you little. A timed set on Taxation of Debt Products shows your real accuracy, how long you take and where you lose marks.

Practise Taxation of Debt ProductsFree diagnostic mock

More Taxation of Debt Products questions