How do I report accrued interest paid at purchase in my ITR?

When you buy a bond between coupon dates you pay the seller the interest accrued so far, then receive the full next coupon yourself. Reported practice is to deduct what you paid the seller from the interest you report on that bond. A tax filing service said on TradingQnA in Jul 2026 that it can be claimed as a deduction under section 57 against the bond's interest income (TradingQnA). The person asking framed the choice as a section 57 deduction or adding the amount to the cost of acquisition, and the question recurs every filing season: "accrued interest bond" brings up tax treatment variants in Google autocomplete (Google autocomplete).

A worked example

Illustrative numbers, not a real bond: ₹1,000 face value, a 9% coupon paid once a year, bought 4 months after the last coupon.

Step	Amount
Accrued interest paid to the seller	₹30
Coupon received 8 months later	₹90
TDS deducted by the issuer at 10%	₹9
Credited to your bank	₹81
Taxable interest under the reported practice (₹90 less ₹30)	₹60

You then claim the ₹9 TDS as tax already paid.

Adding the ₹30 to your cost instead would tax the full ₹90 as interest now and leave a ₹30 difference to be handled as a capital gain or loss when you sell or the bond is redeemed, possibly in a different year and at a different rate. That is why the 2 approaches give different answers, and why this page does not choose between them.

Where do I find the accrued interest figure?

• Bought on a bond app (RFQ). The RFQ platform records price, accrued interest and consideration as separate fields (NSE RFQ), and platforms must send a deal sheet after execution (SEBI NCS Master Circular). The figure is on it.
• Bought on the exchange order book. The price is dirty, so accrued interest is inside it and not shown separately (NSE circulars). Zerodha's Console shows the dirty price as your buy average (Zerodha support). Work it out from the coupon rate, the last coupon date and the settlement date, or ask your broker.

Is TDS deducted on the full coupon?

Yes. Since 1st Apr 2023, issuers deduct 10% TDS on interest from listed debentures (EY), and they deduct it on the whole coupon paid to the holder on the record date, including the part that compensated the seller. The deducted amount is credited against your tax.

Which section applies from 1st Apr 2026?

The Income-tax Act 2025 took effect on 1st Apr 2026 and renumbered many provisions; TDS on interest on securities moved from section 193 to section 393(1) at the same rate (TDSMAN). Section 57 is the old Act's section. This site has not verified which section of the 2025 Act carries the same deduction for income earned from 1st Apr 2026.

What about the seller?

The seller receives accrued interest inside the sale price. This site has not verified how a seller should report it, so take that question to a CA as well. For how the price is built, see Clean price vs dirty price.