I invested Rs 50,000 in a bond with a 10% coupon rate. I expected to receive Rs 5,000 as interest but my payout was only Rs 4,500. I checked the app and it says the payout was processed correctly. I wanted to ask if I calculated something wrong or if there is a deduction happening that I was not aware of. A little worried because this is my first bond investment.
Nothing to worry about, this is completely normal. What happened is the issuer deducted 10% TDS on your interest before sending it to you. So on Rs 5,000 interest, Rs 500 was cut as tax at source and Rs 4,500 came to your bank. Happens with every bond payout, yours included.
The Rs 500 is not gone. It goes to the government as advance tax paid on your behalf. Check your Form 26AS in a few days and you will see it sitting there.
One thing worth knowing for your ITR. That Rs 500 deducted shows as tax already paid when you file. If your total tax liability on this interest income works out to less than Rs 500 you get a refund. If it is more you pay the difference. Depends entirely on which slab you are in. Keep the Form 26AS ready when you file, that is the document that shows the TDS credit.