786/CBDT. - Income Tax - 786/CBDT

INSTRUCTION NO. 786/CBDT Dated : November 11, 1974 Section(s) Referred: 195 ,214 ,194A Statute: Income - Tax Act, 1961 Reference is invited to the Board's Instruction No.537 (F.No.277/5/73-ITJ) dated 31st March, 1973. 2. In para 2 of the above Instruction, it was inter alia stated that the Committee's observations in para 2.381 of their 51st Report about Income tax Department's omission to deduct tax from payments of interest paid by them to assessees was under consideration. 3. The Board desire that pending further consideration of the observation of the Public Accounts Committee referred to above, the ITOs should, in compliance with the provisions of section 194-A, as it stands, deduct tax at source on interest payments to assessees, and deposit it to the Government account. For this purpose, the ITOs should prepare separate refund orders, one for the net amount of refund payable after deduction of tax at source and the other for the amount of tax deducted at source. While the former refund order should be sent to the assessee as usual, the latter refund order should be made out in favour of the IT Department and forwarded to the Reserve Bank or the State Bank of India together with a suitable covering letter and a challan for the like amount for credit to the Central Government account. The ITO should also issue to the assessee, a certificate of tax deducted at source in the prescribed form (Form No.19A) in accordance with the provisions of section 203 of the Act and Rule 31 (4A) of the IT Rules, 1962. 4. These instructions will mutatis mutandis apply to deduction of tax at source required to be made under section 195 from payments of interest to a non-resident. 5. The above instruction may be brought to the notice of all the ITOs under each charge.