Section 196D - Income of Foreign Institutional Investors from securities - Income-tax Act, 1961

1 [Income of Foreign Institutional Investors from securities. 196D. (1) Where 3 [any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD, is payable] to a Foreign Institutional Investor, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof 4 [ by any mode ] , whichever is earlier, deduct income-tax thereon at the rate of twenty per cent : 7 [Provided that where an agreement referred to in sub-section (1) of section 90 or sub-section (1) of section 90A applies to the payee and if the payee has furnished a certificate referred to in sub-section (4) of section 90 or sub-section (4) of section 90A, as the case may be, then, income-tax thereon shall be deducted at the rate of twenty per cent. or at the rate or rates of income-tax provided in such agreement for such income, whichever is lower. ] 5 [****] 6 [ (1A) Where any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD, is payable to a specified fund [referred to in clause (c) of the Explanation to clause (4D) of section 10], the person responsible for making the payment shall, at the time of credit of such income to the account of the payee, or at the time of payment thereof by any mode, whichever is earlier, deduct the income-tax thereon at the rate of ten per cent.: Provided that no deduction shall be made in respect of an income exempt under clause (4D) of section 10. ] (2) No deduction of tax shall be made from any income, by way of capital gains arising from the transfer of securities referred to in section 115AD, payable to a Foreign Institutional Investor.] -------------------- Notes :- 1. Inserted by the Finance Act, 1993, w.e.f. 1-6-1993. 2 . Inserted by the Finance Act, 2003, w.e.f. 1-4-2003. Earlier the proviso was inserted by the Finance Act, 1997, w.e.f. 1-6-1997 and later on omitted by the Finance Act, 2002, w.e.f. 1-6-2002. 3. Substituted vide Finance Act 2013, w.e.f. 1st day of June, 2013 before it was read as any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD is payable . 4. Substituted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020 before it was read as in cash or by issue of a cheque or draft or by any other mode 5. Omitted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020 before it was read as 2 [Provided that no such deduction shall be made in respect of any dividends referred to in section 115-O.] 6. Inserted vide THE TAXATION AND OTHER LAWS (RELAXATION AND AMENDMENT OF CERTAIN PROVISIONS) ACT, 2020 dated 29-09-2020 w.e.f. 01-11-2020 7. Inserted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-04-2021