Investment in Securities

(This means Interest on bonds, debentures etc. issued by companies, central government, state government local authority etc.)

If it is Regular Business-Interest Taxable as PGBP

If Not a regular business-Interest Taxable as Income from Other Source

  1. If it is regular business of the assessee to invest in such securities than it is taxable under P.G.B.P otherwise taxable under income from other sources.
  2. If the assessee follows cash basis then interest taxable when received.However if mercantile system is followed then interest is taxable when accrued even though not yet received
  3. Sometime TDS is also deducted at the rate of 10% in this case amount received is net of TDS
  4. Following deductions are allowed
  • Collection charges
  • Interest on loan for purchase of security
  • Other related expenditure

    [However capital expenditure is not allowed as deduction]  



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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 13 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.