I had invested ₹25,000 in “Inflation Indexed National Savings Securities – Cumulative (IINSS-C)“ in December 2013. It is due for maturity in December 2023. I have opted for “Old Tax Regime” and come under the 30 per cent slab rate. In this regard, I have the following queries:
- What is the inflation rate for every half year from the date of issue of bonds till date of redemption, and how is the interest calculated?
- Whether the gains are taxable?
- If taxable, then whether the gains are taxable under the head “Income from Capital Gains” or “Income from Other Sources”?
- Am I eligible for Indexation Benefits?
S. Subramanyan
The Reserve Bank of India offers investors a return of 1.5 per cent more than inflation based on the consumer price index. Interest is compounded half-yearly and paid along with principal at the time of redemption. You can access more information on interest and other terms from the RBI.
The interest will be taxable under “income from other sources”. Unlike other securities, there is no concept of splitting the income into two parts, namely interest and capital gain.
The author is Partner, Deloitte India
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