SBI bond issue 2011 and TDS confusion

SBI has come up with a bond issue again. The previous edition was a super duper hit and now the bonds come with more attractive interest rates for 10 year and 15 year periods.

These bonds would be available for trading and would be available in demat form only.

However there is some serious confusion about TDS for the bond issue(  tax deduction at source).

The prospectus says there would be TDS on interest beyond Rs 2500 pa  in one place and talks of TDS above interest of Rs 10000 pa in another ( prospectus on NSE site).

The application form says there will be no TDS as the bonds would be listed and for bonds held in demat form. The confusing part is the bond can be applied only if one has a demat account. :-)

Note :- TDS was not applicable in the previous edition.

SBI and regulators reviewing the prospectus should be more careful when coming up with the prospectus.

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