Computation of Tax on KVP Interest in India Income Tax Filing

Question

How to file KVP (Kisan Vikas Patra) accrued interest in ITR returns?

My CA had been following the practise of calculating the accrued interest on KVP every financial year and showing it under deposit income head.

Example for KVP done on principal of Rs. 1,00,000/- the maturity amount will be Rs. 2,00,000/- say in 10 years time.

So my CA told that for 2.5 years from booking KVP, no accrued interest on KVP. But after that until maturity, the CA calculated accrued interest per financial year and showed that as income and we paid tax on it.

But on maturity on the KVP, the AIS is showing the entire interest of Rs. 1,00,000/- paid during single financial year.

What shall I do now? What is the right way to handle KVP interest with respect to Income Tax Returns?

Lets say I have already shown interest income of Rs 80,000 in last 9 years of ITR filing for this KVP, so can I use only Rs. 20,000 in this year ITR filing and raise an objection in AIS that the interest paid in this financial year is not Rs. 1,00,000 but Rs. 20,000 instead?

Answer 1

In case of any inquiry about the mismatch of the interest income appearing in the AIS in the year of maturity vis-à-vis the interest income offered to tax in that year, the same may be explained on the basis of a reconciliation of the accrued amount offered to tax in past years’ tax return and necessary documentary evidence.

Source: https://www.livemint.com/money/personal-finance/avoiding-double-taxation-on-kisan-vikas-patra-interest-income-expert-advice-for-2021-investments-and-income-tax-returns-11684691168297.html