Section 193: TDS on Interest on Securities

This article explains about important provisions of Section 193 of Income-tax act 1961 "TDS on Interest on securities"

According to section 193 Any person responsible for paying to a resident any income by way of interest on securities is required to deduct TDS.

Timing of Deduction under section 193:
At the time of credit to the account of the payee or
At the time of payment,
whichever is earlier.

TDS Rate u/s 193: 10%

NO TDS is required to be deducted for interest payable on the following:

1. 4% National Defence Bonds, 1972, held by an individual, not being a non-resident; or
2. 4% National Defence Loan, 1968, or 4% National Defence Loan, 1972, held by an individual ; or
3. National Development Bonds; or
4. 7-Year National Savings Certificates; or
5. Debentures, issued by any institution or authority, or any public sector company, or any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf;
6. 6% Gold Bonds, 1977, or 7% Gold Bonds, 1980, where the Bonds are held by an individual not being a non-resident, and the holder thereof makes a declaration in writing before the person responsible for paying the interest that the total nominal value of the 6% Gold Bonds, 1977, or, as the case may be, the 7% Gold Bonds, 1980, held by him (including such bonds, if any, held on his behalf by any other person) did not in either case exceed Rs 10,000 at any time during the period to which the interest relates;
7. Any interest payable on any security issued by a company, where such security is in dematerialised form and is listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and the rules made thereunder.
8. Any security of the Central Government or a State Government "Except interest exceeding Rs 10,000 payable on 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year;Any interest payable to the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), in respect of any securities owned by it or in which it has full beneficial interest; or
9. Any interest payable to the General Insurance Corporation of India (hereafter in this clause referred to as the Corporation) or to any of the four companies (hereafter in this clause referred to as such company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any securities owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest; or
10. Any interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficial interest;
11. Any interest payable to an individual or a Hindu undivided family, who is resident in India, on any debenture issued by a company in which the public are substantially interested, if-

• (a) the amount of interest does not exceed Rs 5,000 in FY; and
• (b) such interest is paid by the company by an account payee cheque;

Explanation—For the purposes of this section, where any income by way of interest on securities is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Last Modified date 01/08/2020.

 Source "Incometaxindia"

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