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TMI BlogSection 193 of the Income-tax Act, 1961--Deduction of income-tax at source from interest on securities during the financial year 1993-94--Instructions regardingX X X X Extracts X X X X X X X X Extracts X X X X ..... come to the account of the payee. 3. For the financial year 1993-94, there is no change in the basic rates of tax and surcharge in so far as they relate to deduction of tax at source from the payment of interest on securities. The applicable rates are given in Part II of the First Schedule to the Finance Act, 1993. Briefly stated, these are as follows : (A) In the case of a payee other than a company,— (i) where the payee is resident in India,— (a) On income by way of interest payable on any security, other than tax-free security, of the Central or State Government; 10 per cent (b) on income by way of interest payable on any debentures or other securities for money issued on behalf of any local authority or a corporation established by a Central, State or Provincial Act; 10 per cent (c) on income by way of interest on any debentures issued by a company where such debentures are listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956, and any rules made thereunder; 10 per cent (d) on any other income (excluding interest payable on tax-free security); 20 per cent (ii) Where the payee is not resident in India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -94 will be nil. A copy of such declaration should be forwarded by the tax-deductor on or before the seventh day of the month next following the month in which the declaration is received by him, to the Chief Commissioner/Commissioner of Income-tax concerned, as provided in rule 29C(5) of the Income-tax Rules, 1962. (d) no tax will be deducted at source or it will be deducted at a lower rate in the case of a person (including a company) where a certificate under section 197 is issued by the Assessing Officer on or after 1st April, 1993, specifying the rate of such deduction of tax at source. Where such exemption on abatement certificate has been issued before 1st April, 1993, it should be accepted and acted upon, if it is operative for the financial year ending on 31st March, 1994. (e) no tax should be deducted in cases in which, from a certificate issued by the Income-tax Officer/Assessing Officer or otherwise, the tax deductor is satisfied that the payee is a person exempt from payment of income-tax under sections 10 to 13A of the Income-tax Act, 1961. (f) no tax should be deducted from interest payable on securities/bonds/debentures which have been specifically exempted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was deductible to the date on which such tax is actually paid. Further, section 271C lays down that if any person fails to deduct tax at source, he shall be liable to pay by way of penalty a sum equal to the amount of tax which he failed to deduct at source. In this regard, attention is also invited to the provisions of section 276B which lays down that if a person fails to pay to the credit of the Central Government the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. (b) According to the provisions of section 203, every person deducting tax at source is required to furnish a certificate to the effect that tax has been deducted and to specify therein the amount so deducted and certain other particulars. The certificate has to be furnished in Form No. 16A (Copy enclosed at annexure III) within the prescribed period of one month and fourteen days to the person to whose account credit is given or to whom payment is made by any mode, as the case may be. Form No. 16A can be issued by the tax deductors on their own stationery. Detailed instructions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this circular to the notice of their concerned departments/officers, who are responsible for making payment of interest on securities, for necessary action and compliance. 8. These instructions are not exhaustive and are issued with a view to helping the persons responsible for deducting tax at source from payment of interest on securities. In the case of any doubt, reference should be made to the relevant provisions of the Income-tax Act, 1961, and the Income-tax Rules, 1962. If any assistance is required, the Assessing Officer or the Public Relations Officer of the Income-tax Department should be contacted. 9. Copies of this circular will be available with the Directorate of Income-tax (RSP & PR), 6th Floor, Mayur Bhavan, Connaught Circus, New Delhi-110 001. (Sd.) Rajesh Chandra, Under Secretary, Central Board of Direct Taxes. ANNEXURE I [See item (A)(ii)(b) of para 3] EXTRACT FROM THE FINANCE ACT, 1993, PART III OF THE FIRST SCHEDULE Paragraph A Sub-paragraph I In the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were acquired by the declarant 2. that my present occupation is.......................... 3. that the tax on my estimated total income, including the interest on securities referred to in paragraph 1 above, computed in accordance with the provisions of the Income-tax Act, 1961, for the previous year ending on................relevant to the assessment year 19.....19.....will be nil ; 4. *that I have not been assessed to income-tax at any time in the past but I fall within the jurisdiction of the Chief Commissioner or Commissioner of Income-tax....................... or that I was last assessed to income-tax for assessment year 19.....19...... by the Assessing Officer......................... Circle/Ward/District and the permanent account number allotted to me is............................. 5. that I am resident in India within the meaning of section 6 of the Income-tax Act, 1961. ........................................................ Signature of the declarant Verification I...................................................do hereby declare that to the best of my knowledge and belief what is stated above is correct, complete and is truly stated. Verified today ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in section 196C, income of Foreign Institutional Investors from securities referred to in section 196D]. Name and address of the TDS circle Name and address of the person deducting tax where Annual person to whom payment ................................................ Return under is made or in whose ................................................ section 206 is to account it is credited ................................................ be delivered ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ ................................................ TAX DEDUCTION A/C NO. NATURE OF PAN/GIR NO. OF THE OF THE DEDUCTOR PAYMENT PAYEE PAN/GIR NO. OF THE FOR THE PERI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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