Instructions for deduction of tax at source from interest other than interest on securities during financial year 1975-76 at the rates specified in Part II of First Schedule to Finance Act, 1975 - Income Tax - 168/1975

Circular No. 168 Dated 9/6/1975 Instructions for deduction of tax at source from interest other than interest on securities during financial year 1975-76 at the rates specified in Part II of First Schedule to Finance Act, 1975 1. Under section 194A any person not being an individual or a Hindu undivided family, paying to a resident, any income by way of interest (other than interest on securities) is required, 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 a draft, to deduct income-tax thereon at the rates in force. The Finance Act, 1975 has amended section 194A to provide that tax would be deducted at source from interest where the income by way of interest credited or paid or likely to be credited or paid to the payee during the financial year exceeds Rs. 1,000. Before the amendment, the deduction was required to be made in cases where the amount paid or credited at any one time exceeded Rs. 400. The Amendment also provides that the person responsible for making the payment may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year. 2. The rates for the financial year 1975-76 as prescribed in Part II of the First Schedule to the Finance Act, 1975 are as follows : Income-tax Surcharge I. In the case of a person other than a company 10 per cent Nil II. In the case of a company— ( a ) where the company is a domestic company 20 per cent 1 per cent ( b ) where the company is not a domestic company 70 per cent 3.5 per cent 3. Under section 195, any person responsible for paying to a non-resident, not being a company, or to a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividend within India, any interest (other than interest on securities), will be required, at the time of payment, to deduct income-tax thereon at the rates in force. The rates prescribed for the purpose in Part II of the First Schedule to the Finance Act, 1975 for the financial year 1975-76 are as under : Income-tax Surcharge I. In the case of a person other than a company 30 per cent 3 per cent or income-tax and surcharge in respect of the income by way of interest at the rates prescribed in sub-paragraph I of Paragraph A of Part III of this Sche-dule, if such income had been the total income, whichever is higher; II. In the case of a company 70 per cent 3.5 per cent. Circular: No. 168 [F. No. 275/43/75-ITJ], dated 9-6-1975 .