Deduction of tax at source-Section 193 read with section 197(1)/(2) of the Income-tax Act, 1961-Interest on Government Securities-Rates of tax applicable during the year 1987-88 - Income Tax - 486/1987

Deduction of tax at source-Section 193 read with section 197(1)/(2) of the Income-tax Act, 1961-Interest on Government Securities-Rates of tax applicable during the year 1987-88 Circular No. 486 Dated 1/6/1987 From Shri B. Nagarajan, Director, Central Board of Direct Taxes. To All Accountants General Comptrollers, Accountant General, Post Telegraph, Simla, Deputy Accountant General, Post Telegraph, Calcutta and Comptroller Auditor General of India, New Delhi. Sir, Subject: Deduction of tax at source-Section 193 read with section 197(1)/(2) of the Income-tax Act, 1961-Interest on Government Securities-Rates of tax applicable during the year 1987-88. I am directed to invite a reference to this Department's Circular No. 460 [F. No. 275/68/86-IT (B)] dated 3-7-1986 [Printed at [1986] 160 ITR (St.) 57] on the above subject wherein you were requested to issue necessary instructions to all the Treasury Officers, etc., for making deduction of income-tax at source from the payment of "Interest on Government Securities" for the financial year 1986-87. 2. There is no change in the basic rates of tax for the financial year 1987-88, in so far as they relate to deduction of tax at source from payment of "Interest on Government Securities" I am enclosing a copy of the draft circular letter setting out the rates at which income-tax should be deducted from such payments after 31st March, 1987 You may please issue the circular on the basis of this draft to all Treasury Officers and Sub-Treasury Officers under your control individually, with a view to ensuring that the provisions of the Act are strictly adhered to by them. 3. It may be mentioned that the Finance Act, 1987, has inserted a new section 203A in the Income-tax Act, 1961, with effect from 1-6-1987. The new section reads as under: "203A. (1) Every person deducting tax in accordance with the provisions of sections 192 to 194, section 194A, section 194B, section 194BB, section 194C, section 194D and section 195, if he has not been allotted any tax deduction account number shall, within such time as may be prescribed, apply to the Income-tax Officer for the allotment of a tax deduction account number. (2) Where a tax deduction account number has been allotted to a person, such person shall quote such number,- (a) in all challans for the payment of any sum in accordance with the provisions of section 200; (b) in all certificates issued in accordance with the provisions of section 203; (c) in all the returns delivered in accordance with the provisions of sections 206, 206A and 206B to any income-tax authority; and (d) in all other documents pertaining to such transactions as may be prescribed in the interests of revenue." It may be pointed out that if a person fails to comply with the provisions of section 203A, he shall on an order passed by Income-tax Officer, pay by way of penalty a sum which may be to the extent of Rs. 5,000, as per the provisions of section 272BB which will be inserted in the Income-tax Act with effect from 1-6-1987. 4. The Finance Act has also substituted, with effect from 1-6-87, section 206 of the Income-tax Act with the following new section: "206. The prescribed person in the case of every office of Government, the Principal Officer in the case of every company, the prescribed person in the case of every local authority or other public body or association, every private employer and every other person responsible for deducting tax under the foregoing provisions of this Chapter shall prepare, within the prescribed time after the end of each financial year, and deliver or cause to be delivered to the prescribed income-tax authority, such returns in such form and verified in such manner and setting forth such particulars as may be prescribed." 5. A separate circular will be issued to prescribe the time for filing an application for allotment of tax deduction account number under section 203A, to prescribe the income-tax authority to whom the returns, etc., under section 206 are to be submitted and to cover any other incidental matter. In the meantime, the persons deducting the tax in accordance with the provisions of section 193 may be advised to apply to the concerned Income-tax Officer immediately for the allotment of tax deduction account number. Encl: As above Yours faithfully, (Sd.) B. Nagarajan, Director, Central Board of Direct Taxes.