8/10/2019 Tax deducted at source (TDS) for interest on securities (debentures) Section 193

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Tax deducted at source (TDS) for interest on securities (debentures) - Section

193

Barring certain exception, tax has to be deducted at source on payment of interest on securities to residents.

Key Points - TDS on interest on securities

Who is liable to deduct TDS? Any assessee be it Individual, company, HUF , Partnership etc.

For whom should TDS be

deducted?

From Resident assessee (individual, company, HUF etc) to whom interest is

paid

At what rate should tax be

deducted?

For AY 2014-15 & AY 2015-16 TDS should be deducted @ 10%

When should TDS be deducted TDS should be deducted at the at the time of credit of such income to the account of the payee OR

at the time of payment thereof in cash OR

by issue of a cheque or draft or by any other mode, whichever is

earlier

Interest on Securities Exempt from TDS provision u/s 193

In the below cases TDS on securities will be exempt from TDS u/s 193

1. Interest payable on 4 % National Defence Bonds, 1972 held by Resident Individual

2.

Interest payable to an individual on 4 % National Defence Loan, 1968,

3.

Interest payable to an individual on 4% National Defence Loan, 1972

4. Interest payable on National Development Bonds

5. Interest payable on 7-Year National Savings Certificates (IV Issue)

6.

Interest payable on any security of the Central Government or a State Government:

7.

If interest does not exceed 10,000 Rs.

a.

Interest payable on 6% Gold Bonds, 1977 held by resident individualb. Interest payable on 7% Gold Bonds, 1980 held by resident individual

8. If interest does not exceed 10,000 Rs.

a.

Interest payable on 8% Savings (Taxable) Bonds, 2003

9. If interest does not exceed 5,000 Rs. & paid by a/c payee cheque

a.

Interest payable to a resident individual being interest on debentures listed on a recognised stock

exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956),

and any rules made there under

10.

Interest payable to the Life Insurance Corporation of India

11.

Interest payable to the General Insurance Corporation of India

12.

Interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficialinterest;

8/10/2019 Tax deducted at source (TDS) for interest on securities (debentures) Section 193

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13.

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

14.

Any other interest notified in official Gazette by Central Govt.

Key Explanation to section 193

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.

No TDS deduction if 15 G/ 15 H certificate provided

Tax is not deductible u/s 193 if the recipient makes a declaration in Form No. 15G/15H that their total income of the

previous year is less than minimum income liable to tax. 15 G is applicable for resident individuals not being senior

citizens and 15 H is applicable for resident senior citizens.