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TMI BlogDeduction of tax at source--Section 193 read with section 197(1)/(2) of the Income-tax Act, 1961--Interest on Government securities--Rates of tax applicable during the year 1990-91X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of payment thereof, whichever is earlier. For this purpose, credit to any suspense account or any other account, by whatever name called, shall be deemed to be a credit of such income to the account of the payee; (b) tax will not be deducted at source from any interest payable to a resident individual on debentures issued by a company in which the public are substantially interested, if the interest is paid by the company by an account payee cheque and the amount of such interest, or, as the case may be, the aggregate amount of such interest paid or likely to be paid during the financial year by the company to such an individual does not exceed Rs.2,500. 3. In this connection, attention is invited to the provisions of sections 200, 203, 203A and 206 of the Income- tax Act, the sum and substance of which is as under:-- (a) According to the provisions of section 203 of the Income-tax Act, every person responsible for deducting tax at source is required to furnish a certificate to the effect that tax has been deducted and to specify therein, inter alia, the amount deducted and other particulars that may be prescribed. The certificate has to be furnished within the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " in Form No.25 prescribed under rule 37 of the Income-tax Rules. It may be noted that the third copy of the TDS certificate issued to the assessee should be enclosed with the annual return. If a person fails to furnish in due time the annual return, he shall, on an order passed by the income-tax authority, under section 272A, pay, by way of penalty, a sum which shall not be less than Rs.100, but which may extend to Rs.200 per day for which the failure continues. (d) According to the provisions of section 200 of the Income-tax Act, any person deducting any sum in accordance with the provisions of section 193 shall pay, within the prescribed time, the sum so deducted to the account credit of the Central Government. If he fails to deduct tax at source, or, after deducting, fails to pay tax to the credit of the Government, he shall be liable to action in accordance with the provisions of sections 201 and 221. Further, penalty under section 271C shall also be leviable for failure to deduct tax at source which will be equal to the amount of tax not deducted. In this connection, attention is also invited to the provisions of section 276B of the Income-tax Act, according to which if a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph I of Paragraph A of Part III of the First Schedule to the Finance Act, 1990 (Copy at Annexure I), if such income had been the total income, whichever is higher. 2. In the case of any other person,— A. On the income by way of interest on a tax-free security 15 per cent B. On the whole of other income (excluding interest payable on a tax-free security) [As against 1(c) above] II. In the case of a company;— (i) Where the company is a domestic company - on income by way of interest on securities (excluding interest payable on a tax-free security) 21.5 per cent (ii) Where the company is not a domestic company— A. On interest payable on a tax-free security 44 per cent B. On interest on other securities 65 per cent. Surcharge on income-tax The amount of tax deducted as per the rates given above shall be increased : (i) by a surcharge for the purposes of the Union @ 8 per cent of such income-tax in the case of resident person; and (ii) by a surcharge @ 8 per cent of such income-tax in the case of a domestic company. 4. The term "domestic company" means an Indian company or any other company which, in respect of its income liable to tax under the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following the month in which the declaration is furnished to you to the Chief Commissioner/Commissioner of Income-tax concerned, as provided in rule 29C of the Income-tax Rules, 1962; (vi) no tax should be deducted from any sum payable in respect of any security owned by a corporation established by or under a Central Act which, under any law for the time being in force, is exempt from income-tax on its income. Payments made to Life Insurance Corporation and Unit Trust of India are exempt from the requirement of tax deducted at source by their respective Acts. (vii) under section 288B of the Income-tax Act, fractions of one rupee contained in the amount of tax will have to be rounded off to the nearest rupee by ignoring amounts less than fifty paise and increasing amounts of fifty paise or more to one rupee. Hence, the amount of tax to be deducted at source should be rounded off to the nearest rupee in accordance with the aforesaid provisions of the Act. 6. Attention is invited in this connection to the provisions of sections 200, 203, 203A and 206 of the Income-tax Act. The sum and substance of which are as under: (a) According to the provisions of section 203 of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to be delivered by the 31st May since amended as 30th June, vide Notification No. S.O. 466(E), dated 8th June, 1990 (See [1990] 184 ITR (St.) 134), following the financial year to the designated Income-tax Officer, the annual return of deduction of tax under section 193 from "Interest on securities" in Form No.25 prescribed under rule 37 of the Income-tax Rules. It may be noted that the third copy of the tax deducted at source certificates issued to the assessee should be enclosed with the annual return. If a person fails to furnish in due time the annual return, he shall, on an order passed by the income-tax authority under section 272A, pay, by way of penalty, a sum which shall not be less than one hundred rupees, but which may extend to two hundred rupees for every day during which the failure continues. (d) According to the provisions of section 200 of the Income-tax Act, any person deducting any sum in accordance with the provisions of section 193 shall pay, within the prescribed time, the sum so deducted to the credit of the Central Government. If he fails to deduct tax at source or after deducting fails to pay the tax to the credit of the Government, he shall be liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily or association of persons or body of individuals referred to in sections 88 and 88A having a total income exceeding seventy-five thousand rupees, be reduced by the amount of rebate of income-tax calculated under Chapter VIII-A, and the income-tax as so reduced, (ii) in the case of every person, other than those mentioned in item (i) having a total income exceeding seventy-five thousand rupees, be increased by a surcharge for purposes of the Union calculated at the rate of eight per cent of such income-tax: Provided that no such surcharge shall be payable by a non-resident. ANNEXURE II FORM NO. 15F [See rule 29C(1)] Declaration under section 197A(1) of the Income-tax Act, 1961, to be made by an individual claiming receipt of "interest on securities" without deduction of tax I.................................................... son/daughter/wife of................................ resident of† ................................do hereby declare— 1. that the securities, particulars of which are given below, stand in my name and are beneficially owned by me, and the interest therefrom is not includible in the total income of any other person under sections 60 to 64 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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