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Bond Investments Eligible for Deductions

Holders of certain bonds are eligible to claim deduction from their taxable income. A list of such deposits is mentioned hereunder :

  • Interest on Government Securities, National Savings Certificate (issues VI, VII and VIII), Development Bonds, Development Bonds and 7 year National Rural Development Bonds
  • Interest on Post Office Term Deposits, Recurring Deposits Accounts and National Savings Schemes (as referred to in National Savings Scheme Rules, 1992)
  • Dividends received from a co-operative society
  • Income from investments in UTI (up to assessment year 1999-2000)
  • Interest on deposits with a banking company or a co-operative bank
  • Interest on deposits with a co-operative society made by a member of the society
  • Interest on deposits with housing boards
  • Interest from deposits made under A.E. (C, D.) Act & C.D.S. (I.T.P.) Act.
  • Interest on notified debentures of any co-operative society, any institution or any public sector company.
  • Interest on deposits with a financial corporation which is engaged in providing long-term finance for industrial development in India and which is entitled for deduction under Section 36(l)(viii) [up to assessment year 1999-2000, the corporation is approved by Central Government].
  • Interest on deposits with a public company formed and registered in India with the major object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes and which is eligible for deduction under Section 36(l)(viii) [up to assessment year 1999-2000, the company is approved by the Central Government under Section 36(l)(viii)].
  • Interest on deposits with Industrial Development Bank of India.
  • Interest on deposits under National Deposit Scheme. Income in respect of units of mutual fund specified under Section 10(23D).
  • Interest on deposits under Post Office (Monthly Income Account) Rules
Deposits and Bank Accounts
Fixed deposits