You will only need to disclose the interest accrued during the current year on the certificate and not the interest received at the time of withdrawal, since you have already offered interest on an accrual basis in previous years.
This interest will be taxed as income from other sources and disclosed on Schedule OS (other sources) of your income tax return.
Kisan Vikas Patra is a certificate-based savings scheme that was initially meant for farmers but is now available to all individuals and trusts resident in India. While the investment matures in 115 months, the balance i.e. principal plus interest can be withdrawn up to the date of withdrawal after a lock-in period of 30 months.
A person is permitted to offer to tax the interest as income from other sources, either on the accrual or cash basis, depending on the method followed for income from the same source.
Interest may be offered on an accrual basis each year at the rate of interest announced regularly by the Ministry of Finance along with the rates of other savings schemes. The interest accrued on the investment is compounded and is not simple interest.
Also, no TDS is applicable on the interest from Kisan Vikas Patra. Therefore, this income is not reflected in Form 26AS. However, the entire interest is generally disclosed in the taxpayer’s annual reporting system in the year of maturity or withdrawal.
Therefore, if the accrual method of taxing interest is followed and the interest is offered to be taxed every year, there could be a mismatch in the year of maturity or withdrawal as the interest amount in the AIS would be the full interest on the investment, whereas the interest offered to be taxed during the year would be only the interest accrued during the year.
It would also be necessary to disagree with the information in the AIS and select the option “The information relates to another PAN/year” and then provide the details of the previous years and the interest income from the investment offered in each of the previous years in a separate row.
—Mahesh Nayak, CPA, CNK & Associates
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.