Eight per cent taxable bonds, floated by the government in 2003, will attract tax deduction at source (TDS) from Friday on interest exceeding Rs 10,000 in a year.
"Tax is required to be deducted at source on the interest exceeding Rs 10,000 payable during the financial year on 8 per cent Savings (Taxable) Bonds, 2003 with effect from June 1, 2007," Reserve Bank of India (RBI) said in a communication to the banks.
The government has floated the eight per cent taxable bonds in 2003 with a maturity of six years. The interest was payable on non-cumulative bonds half yearly and cumulative bonds on maturity.
These bonds were initially exempted from TDS on the interest amount.