Skip to content

CS Executive · Tax Laws and Practice · Income from Other Sources

Under the Income-tax Act, 2025 (applicable from the June 2027 session), a non-resident holds bonds of an Indian company issued under a notified scheme and purchased in foreign currency. At what rate is the interest on these bonds taxed under section 209?

The interest is taxed at 10%. Section 209 of the Income-tax Act, 2025 provides a concessional 10% rate on interest from notified bonds of an Indian company purchased in foreign currency by a non-resident. Rates in force apply only to the rest of the income.

  1. A10%Correct
  2. B12.5%
  3. C20%
  4. DRates in force applicable to the non-resident

Explanation

Section 209(1), Table Sl. No. 1, taxes interest on notified bonds of an Indian company purchased in foreign currency at 10%. The 'rates in force' option applies only to the remaining total income (Sl. No. 4), not to this interest. The 12.5% rate is for long-term capital gains on such bonds.

Did you get it right without looking?

One question tells you little. A timed set on Income from Other Sources shows your real accuracy, how long you take and where you lose marks.

Practise Income from Other SourcesFree diagnostic mock

More Income from Other Sources questions