Income Tax Guide | Tax-Exempt Investments

Section 10(15)(iic): Income Tax Exemption on Interest from Notified Relief Bonds

Section 10(15)(iic) of the Income-tax Act, 1961 provided an exemption for interest payable to an individual or Hindu undivided family (HUF) on specified Relief Bonds notified by the Central Government. The exemption depends on the exact bond issue and the applicable government notification; it does not extend to every government security or savings bond.

Eligible taxpayerIndividual or Hindu undivided family

Income coveredInterest on qualifying notified Relief Bonds

ExemptionEligible interest in full

Important conditionBond must qualify under the relevant notification

What does Section 10(15)(iic) mean?

Under the 1961 Act, Section 10(15) listed specific categories of interest income excluded from total income. Clause (iic) dealt with interest on such Relief Bonds as the Central Government specified by notification in the Official Gazette, subject to the conditions of the notified bond issue. Relief Bonds are government-issued debt instruments under specified savings or relief-bond schemes; their income-tax treatment depends on the issue terms and the statute.

Who could claim the exemption?

The specified exemption applied to interest payable to an individual or HUF holding a qualifying notified Relief Bond. It should not be assumed to apply to companies, firms, trusts or other taxpayers merely because they hold a government bond. The instrument, beneficial ownership, applicable tax period and notification must be checked.

How much interest was exempt?

For an eligible holder of an eligible notified Relief Bond, the entire qualifying interest could be excluded from total income under this provision. This is an exemption of the qualifying interest income, not a general exemption for profits from selling bonds, transfer gains, or income from bonds outside the notified category.

Notifications and historical Relief Bond schemes

The original article identifies the following Ministry of Finance notification references associated with Relief Bond schemes. These are retained as historical references, not as confirmation that the relevant bonds remain open for fresh subscription or that every series has identical tax treatment:

F.4(9)-W&M/2003, dated 13 March 2003.
F.4(9)-W&M/2003, dated 9 July 2004.
F.4(5)-W&M/2002(i), dated 28 February 2003.
F.4(13)-W&M/2002, dated 28 February 2003.

Before relying on a historical notification, verify the complete gazetted text, any amendments, the issue date, and whether the instrument held is the notified tax-free series. Different Relief Bond or Savings Bond issues can carry different tax rules.

Tax-free Relief Bonds versus taxable savings bonds

The expression government bond does not automatically mean tax-free bond. Some historical Relief Bond issues offered tax-exempt interest under specific notifications. Other government savings bonds, including taxable savings bond schemes, do not acquire an exemption simply because they are issued by the Government of India or distributed through an authorised bank. Investors should inspect the issue notification, bond certificate and applicable tax legislation.

Example of the exemption

Suppose an individual receives Rs. 24,000 interest from a Relief Bond series that is validly notified for exemption under Section 10(15)(iic), and the investor meets the relevant conditions. For a period governed by the 1961 Act, the qualifying Rs. 24,000 interest is excluded from taxable total income. If the same amount arises from a taxable savings bond, this exemption cannot be claimed merely because the issuer is the government.

Documents to check before claiming relief

Bond certificate, issue name, series and date of allotment.
Original gazette notification and any subsequent amendment applicable to that series.
Interest statements or bank credit records for the relevant tax year.
Evidence that the holder qualifies as an individual or HUF under the provision.
Current return-filing instructions for reporting exempt income, where applicable.

Applicable income-tax law from 1 April 2026

Section 10(15)(iic) is a reference to the Income-tax Act, 1961. The Income-tax Act, 2025 came into force on 1 April 2026. For tax years governed by the 2025 Act, verify the corresponding exemption provision, any savings or transitional rules, and the treatment of legacy bonds. Do not assume the same clause number or that a historical exemption automatically applies to a newly issued instrument.

Official legal sources

Updated 10 October 2026. This article is general information. Confirm the specific bond issue and the law governing the relevant tax year before claiming an exemption.