TDS Return for Interest on KVP

Introduction

Tax Deducted at Source (TDS) is a tax collection system where a person responsible for making certain payments, such as salaries, rent, interest, etc., is required to deduct a certain percentage of tax before making the payment. One such payment on which Tax Deducted at Source is applicable is the interest earned on Kisan Vikas Patra (KVP). In this article, we will discuss TDS return for interest in KVP and its related aspects.

What is Kisan Vikas Patra (KVP)?

Kisan Vikas Patra is a “savings certificate” scheme introduced by the Government of India that doubles the investment in a predetermined period. The investment in KVP is risk-free and guaranteed by the government, making it an attractive investment option for risk-averse investors.

Tax Deducted at Source on Kisan Vikas Patra (KVP)

As per the Income Tax Act, 1961, TDS is applicable on the interest earned on KVP if it exceeds Rs. 10,000 in a financial year. The TDS rate on interest earned on KVP is 10%, and the deductor is required to deduct TDS at the time of payment or credit, whichever is earlier.

TDS Return for Interest on KVP

After deducting TDS, the deductor is required to file a TDS return for the interest earned on KVP. The TDS return is a statement that contains details of TDS deducted, deposited, and other related information. The TDS return for interest on KVP is required to be filed quarterly in Form 26Q.

Penalties for Late Filing or Non-Filing of TDS Return

If the deductor fails to file the TDS return for interest on KVP within the due date, he/she may be liable to pay penalties. The penalty for late filing of a TDS return is Rs. 200 per day until the return is filed. However, the maximum penalty cannot exceed the TDS amount. If the deductor fails to file the TDS return for interest on KVP within one year from the due date, he/she may be liable to pay a penalty of Rs. 10,000.

Procedure for Filing TDS Return for Interest on KVP

The procedure for filing TDS return for interest on KVP is as follows:

Step 1: Register on the e-Filing website of the Income Tax Department using the Permanent Account Number (PAN).

Step 2: Download the TDS return preparation utility from the e-Filing website.

Step 3: Fill in the details of TDS deducted and deposited in the TDS return preparation utility.

Step 4: Generate the XML file of the TDS return.

Step 5: Upload the XML file of the TDS return on the e-Filing website of the Income Tax Department.

Step 6: Verify the TDS return using Digital Signature Certificate (DSC) or Aadhaar-based authentication.

Step 7: Submit the TDS return to the Income Tax Department.

Conclusion

It is important to keep track of the interest earned on KVP and ensure that the deductor has deducted TDS on the same. Non-compliance with TDS rules can lead to legal action and penalties. Hence, it is advisable to file Tax Deducted at Source return for interest on KVP in a timely and accurate manner to avoid any legal complications.

In addition, taxpayers should also make sure that they claim credit for the TDS deducted on their income tax return to avoid double taxation. This can be done by mentioning the TDS details in the relevant section of the ITR (Income Tax Return) form. The TDS return is required to be filed quarterly in Form 26Q.