Interest from bonds gets taxed at your relevant income tax slab rate

Interest from bonds gets taxed at your relevant income tax slab rate.

What happens if you fall under the tax-exempt category or are subject to a lower income tax rate (under 10%)? Can you submit Form 15G or Form 15H to ensure that no TDS is deducted on your interest income—similar to how you do for bank fixed

deposits? “The form has to be submitted to the entity responsible for paying the interest, which is the bond-issuing company,“ says Sabnavis.

Form 15G has to be submitted if you are under 60 years of age and Form 15H, if you are aged 60 or above. She further adds, “We have to wait for more details to see how this will work out for bondholders,” says Sabnavis.

Finally, note that while TDS does not impact your tax liability, it can impact your near-term cash flows. If you have been depending on interest income from bonds for your running expenses, you may have to make some adjustments to account for the amount deducted at source.