The concept of TDS or tax deduction at source was introduced to collect tax at the very source of income. And the interest income on some of the securities such as debentures issued by the company on stock exchanges, bonds, gold bonds etc. attract TDS which reduces overall gains for the investor. Nonetheless, the department of Income tax allows you to claim the amount deducted from your interest earnings.
The deduction of TDS on interest income on securities is as per the provisions of Section 193 of the Income Tax Act which says "The person responsible for paying to a resident any income by way of interest on securities shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax at the rates in force on the amount of the interest payable".
Section 193 provides for 10% tax deduction on income earnings on investments such as
Any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act
Any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder.
Any security of the Central or State Government like 8% Savings (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018.
Process to claim your TDS on income on above specified investments or securities
1. You can visit tin nsdl link https://www.tin-nsdl.com/services/etds-etcs/etds-rpu.html for knowing the file format in which e-TDS return is to be generated.
2. e-TDS return is to be prepared in ASCII format with the filename extension as 'txt'. For the preparation of e-TDS return, deductee can use the NSDL provided Return Preparation Utility or any other third party software.
3. After the e-TDS return has been prepared as per the given file format, it needs to be verified by the NSDL provided the File Validation Utility (FVU). Upon verification, errors if any in the file will be listed which needs to be rectified. After this, run the verification for the file again using FVU.
4. The .fvu generated file can be uploaded at the income tax e-filing website or submitted at TIN-FC.
Herein you need to note that online submission of TDS or TCS statement on income tax e-filing website is mandatory.