Section 193 - Interest on securities - Income-tax Act, 1961

Interest on securities. 193. The person responsible for paying 1 [to a resident] any income 2 [by way of interest on securities] shall, 3 [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], deduct income-tax 4 [***] at the rates in force on the amount of the interest payable : 5 [***] 6 [Provided 7 [***] that no tax shall be deducted from- ( i ) any interest payable on 4 per cent National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident; or 8 [( ia ) any interest payable to an individual on 4 per cent National Defence Loan, 1968, or 4 per cent National Defence Loan, 1972; or ] 9 [( ib ) any interest payable on National Development Bonds; or ] ( ii ) 10 [***] 11 [( iia ) any interest payable on 7-Year National Savings Certificates (IV Issue); or ] 12 [( iib ) any interest payable on such 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 notificationin the Official Gazette, specify in this behalf;] 13 [***]] ( iii ) any interest payable on 6 per cent Gold Bonds, 1977, or 7 per cent 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 per cent Gold Bonds, 1977, or, as the case may be, the 7 per cent 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 ten thousand rupees at any time during the period to which the interest relates; ( iiia ) 14 [* * *] 15 [( iv ) any interest payable on any security of the Central Government or a State Government:] 26 [Provided that nothing in this clause shall apply to the interest exceeding ten thousand rupees payable during the financial year on 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 or Floating Rate Savings Bonds, 2020 (Taxable) or any other security of the Central Government or State Government as the Central Government may, by notification in the Official Gazette, specify in this behalf; ] 17 [ ( v ) 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 or, as the case may be, the aggregate amount of such interest paid or likely to be paid on such debenture during the financial year by the company to such individual or Hindu undivided family does not exceed five thousand rupees; and ( b ) such interest is paid by the company by an account payee cheque; ] 19 [( vi ) 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 ( vii ) 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 ( viii ) any interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficial interest.] 25 [ (ix) any interest payable to a business trust , as defined in clause (13A) of section 2, in respect of any securities, by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10. ] 20 [ Explanation 21 [***].-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.] Explanation 2. - 22 [ ******** ] ******************** Notes :- 1. Inserted by the Finance Act, 2003, w.e.f. 1-6-2003. 2. Substituted for 'chargeable under the head Interest on securities ' by the Finance Act, 1988, w.e.f. 1-4-1989. 3. Substituted for at the time of payment by the Finance Act, 1989, w.e.f. 1-6-1989. 4. and super-tax omitted by the Finance Act, 1965, w.e.f. 1-4-1965. 5. Omitted by the Finance Act, 1992, w.e.f. 1-6-1992. Prior to omission, first proviso was inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 6. Substituted by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965. Original proviso was inserted by the Taxation Laws (Amendment) Act, 1962, w.e.f. 13-12-1962. 7. Word further omitted by the Finance Act, 1992, w.e.f. 1-6-1992. Earlier, further was inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 8. Inserted by the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965. 9. Inserted by the Finance Act, 1978, w.e.f. 1-4-1978. 10. Omitted by the Finance Act, 1988, w.e.f. 1-4-1989. 11. Inserted by the Finance Act, 1970, w.e.f. 1-4-1970. 12. Substituted by the Finance Act, 1986, w.e.f. 1-6-1986. Earlier it was inserted by the Finance Act, 1970, w.e.f. 1-4-1970. 13. Explanation omitted by the Finance Act, 1987, w.e.f. 1-4-1987. Omitted Explanation was inserted by the Finance Act, 1986, w.e.f. 1-4-1986. 14. Omitted by the Finance Act, 1997, w.e.f. 1-6-1997. Prior to its omission, clause (iiia), as inserted by the Finance Act, 1982, w.e.f. 1-6-1982, read as under : (iiia) any interest payable on such securities of the Central Government or a State Government, to such class of persons, and subject to such conditions, as the Central Government may, by notification in the Official Gazette, specify in this behalf; 15. Substituted by the Finance Act, 1997, w.e.f. 1-6-1997. Prior to its substitution, clause (iv), as inserted by the Finance Act, 1966, w.e.f. 1-4-1966, read as under : (iv) any interest payable on any other security of the Central or State Government, where the security is 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- (a) he has not previously been assessed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); (b) his total income of the previous year in which the interest is due is not likely to exceed the maximum amount not chargeable to tax; and (c) the total nominal value of the securities held by him (including such securities, if any, as are held on his behalf by any other person) did not exceed two thousand five hundred rupees at any time during the said previous year; 16. Inserted by the Finance Act, 2007, w.e.f. 1-6-2007. 17. Inserted by the Finance Act, 1984, w.e.f. 1-6-1984. Further Substituted vide Finance Act, 2012, w.e.f. 01-07-2012, before it was read as:- ( v ) any interest payable to an individual, who is resident in India, on debentures issued by a company in which the public are substantially interested, being 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 thereunder, if- ( a ) the interest is paid by the company by an account payee cheque; and ( b ) the amount of such interest or, as the case may be, the aggregate of the amounts of such interest paid or likely to be paid during the financial year by the company to such individual does not exceed 18 [two thousand and five hundred rupees]; 18. Substituted for one thousand rupees by the Finance Act, 1989, w.e.f. 1-6-1989. 19. Clauses (vi), (vii) and (viii) inserted by the Finance Act, 2002, w.e.f. 1-6-2002. 20. Inserted by the Finance Act, 1989, w.e.f. 1-6-1989. Original Explanation, which was inserted by the Finance Act, 1965, w.e.f. 1-4-1965, was omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967. 21. Figure 1 omitted by the Finance Act, 1992, w.e.f. 1-6-1992. Earlier, Explanation was renumbered as Explanation 1 by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991. 22. Prior to omission, Explanation 2, as inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-10-1991, read as under : ' Explanation 2 .- For the purposes of this section, the expression scheduled bank shall have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36.' 23. Inserted by the Finance Act, 2008, w.e.f. 1-6-2008. 24. Inserted vide THE FINANCE ACT, 2018 25. Substituted vide THE FINANCE ACT, 2023 dated 31-03-2023 w.e.f. 01-04-2023 before it was read as, 23 [(ix) 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] 26. Substituted vide Section 51 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 01-10-2024 before it was read as, 16 [Provided that nothing contained in this clause shall apply to the interest exceeding rupees ten thousand payable on 8% Savings (Taxable) Bonds, 2003 24 [or 7.75% Savings (Taxable) Bonds, 2018] during the financial year; ]