Section 193 - TDS on Interest on securities - Income Tax - Ready Reckoner - Income Tax

TDS on Interest on securities - Section 193 Applicability The person responsible for paying to a resident any income by way of interest on securities shall deduct income tax at the rates in force on the amount of interest paid/payable. Rate of TDS 10% Time of deduction The tax is to be deducted either at the time of payment in cash or issue of cheque or any other mode, or at the time of credit of interest to the account of payee, or to the interest payable account or suspense account whichever is earlier. Non applicability of TDS u/s 193 TDS shall not be deducted in following cases: any interest payable on 4 per cent National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident any interest payable to an individual on 4 per cent National Defence Loan, 1968, or 4 per cent National Defence Loan, 1972 any interest payable on National Development Bonds any interest payable on 7-Year National Savings Certificates (IV Issue) 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; Accordingly, the Central Government has, vide Notification No. 27/2018 28/2018 dated 18/06/2018 Notified - the Power Finance Corporation Limited 54EC Capital Gains Bond issued by Power Finance Corporation Limited. - the Indian Railway Finance Corporation Limited 54EC Capital Gains Bond issued by Indian Railway Finance Corporation Limited. - No tax is required to be deducted at source on interest payable on above mention bonds. - The benefit under the said proviso shall be admissible in the case of transfer of such bonds by endorsement or delivery, only if the transferee informs Indian Railway Finance Corporation Limited by registered post within a period of sixty days of such transfer. any interest payable on any security of the Central Government or a State Government. However tax shall be deductible at source in case of 8% Saving (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year, provided the interest on such bonds exceed ₹ 10,000/- during the financial year. [substituted vide Finance (No. 2) Act, 2024 w.e.f 01.10.2024 However tax shall be dedutble at source in case of 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, Provided the interest on such bonds on such goods exceeds ₹10,000/- any interest payable to the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956, in respect of any securities owned by it or in which it has full beneficial interest any interest payable to the General Insurance Corporation of India or any of four companies formed under it any interest payable to any other insurer in respect of any securities owned by it or in which it has full beneficial interest 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 [w.e.f. 1.6.2008 to 31.32023] ** any interest payable to a business trust , as defined in section 2(13A) , in respect of any securities, by a special purpose vehicle referred to in the Explanation to section 10(23FC) . [Amendment by FA, 2023 w.e.f 1.4.2023]