Is tax deducted on coupon payments?

QnA
1

Hi, I received my coupon payment today but noticed that the amount is slightly lower.
How did this happen? Was there any tax which got deducted or any amount mismatch?

2

Hi Shivank

There is a 10% TDS deduction on coupon payments for taxable bonds. This is mandatory as per income tax regulations because coupon payments are treated as interest income.

So the amount you received is your coupon minus TDS.
You can claim this TDS while filing your income tax return.

Here’s the simple logic:

  • Coupon = considered “interest income”

  • Interest income = taxable

  • So issuers deduct TDS before crediting the coupon to your bank account.

TDS is generally deducted at 10% if your PAN is updated.

The good news?
You can always claim credit for this TDS when filing your income tax return.

3

Got it.
So, if my tax slab is lower or higher, how does that affect things?

4

Great question
TDS will be deducted irrespective of your tax slab, it’s a mandatory deduction on coupon payments.
Where your tax slab matters is when you file your Income Tax Return under the “Income From Other Sources (IFOS)” category.
So TDS is fixed, but your actual tax outcome depends on your slab.

5

Hey, thanks for the explanation, I always wondered why my coupon wasn’t the exact face value.
This helps a lot.

6

Glad it helped.
We’ll soon be adding a Tax Summary section in the portfolio so you can track coupon payments, TDS deductions, and expected post-tax returns even more clearly.

If you have any more queries, feel free to reach out, I’ll be happy to assist you here or through any of the channels below:
Call: +91 70711 869639
WhatsApp: +91 93807 40546
Email: support@bondscanner.com