I'd like to know
(1) When would tax be deducted at source in investments in corporate/bank FDs and Non convertible debentures?
Bond /CDs give u income in the form of Interest. Some pay periodic interest while others pay all interest at the maturity.
So whenever the interest is paid, it is taxable in that year. Tax is deducted at standard rate of 20%.
If your annual income thru all type of interests is <5k then u can claim the refund of this deducted tax in your IT return.
I think, it is also possible to give some type of declaration to registrar of bond/CDs so that they don't deduct the tax.
(2) How would be the tax deducted at source calculated and at wht rate? If its as per my income tax slab than how would the issuer know in which tax slab i would fall?
No body know what is your income tax slab. So can somebody use that rate.
Bonds have life of many years.. and anybody's tax slab might change during this period. Hence it is deducted at standard rate.
Hope this helps.
