Government of India introduced 8% Savings (Taxable) Bonds, 2003 in 2003.
Under the existing law, the interest received by the investor is taxable. Further the payer is liable to deduct tax at source under section 193 of the Act at the time of payment or credit of such interest in excess of rupees ten thousand to a resident.
Government has now decided to discontinue the existing 8% Savings (Taxable) Bonds, 2003 with a new 7.75% GOI Savings (Taxable) Bonds, 2018. The interest received under the new bonds will continue to be taxed as in the case of the earlier once.
The provisions of section 193 are proposed to be amended to allow for deduction of tax at source at the time of making payment of interest on such bonds to residents.
However, no TDS will be deducted if the amount of interest is less than or equal to ten thousand rupees during the financial year. This amendment will take effect from 1st April, 2018.