Question

Write short notes on Grossing up of Interst.(10 marks) (150 words)​

Answer 1

The tax on interest on securities is also to be deducted at source at the given tax rates. The gross amount of interest is taxed from the income tax point of view. If what is given is the net interest, it has to be grossed up to calculate the taxable amount of the assessee.

The tax on interest on securities is also to be deducted at source at the given tax rates. The gross amount of interest is taxed from the income tax point of view. If what is given is the net interest, it has to be grossed up to calculate the taxable amount of the assessee. In case of government securities, apart from 8% Saving bonds which are taxable, there is no need to gross up as tax has not been deducted at source. Grossing up is needed in case of the following securities