Introduction to Section 193 of Income Tax Act:
- The provisions to TDS on interest on securities are covered under Section 193. If someone sends a resident income in the form of interest on securities, he or she needs to deduct tax under Section 193.
- When paying the interest on the securities to an NRI, the restrictions of Section 193 will not apply.
Who is required to deduct TDS:
Anyone who is giving the interest income on securities to an Indian Resident to deduct tax before releasing the interest.
Rate of Tax Rate:
- The tax rate under Section 193 – is 10%. The earliest of the actual payment or the time of deduction is when income is credited to the payee’s (receiver’s) account (in cash, cheque, draught, or other modes).
- If a PAN is not provided by the payee or is not available, TDS will be withheld at the maximum marginal rate.
- However, if the requirements are met, this section may issue a reduced TDS certificate or a Nil TDS certificate under Section 197.
In the following circumstances, TDS shall be deducted:
- If debentures are issued by listed businesses, TDS will be applicable if interest amount exceeds Rs. 5000 .
- Exceeds Rs. 10,000 in the case of 8% saving (taxable) bonds.
Due date of TDS deposit and Filing of TDS returns:
The Deductor is liable to deposit TDS with the Government with following dates
| Particulars | Due date of Deposite |
|---|---|
| April-February | 7th of Next following next Month |
| March month | 30th April |
The Deductor is liable to File TDS Returns with the Government with following dates
| Quarter | Due Date for Return |
|---|---|
| April to June | 31st of July |
| July to September | 31st of October |
| October to December | 31st of October |
| January to March | 31st of May |
Excluded in the Deductions of Section 193:
The following items are not subject to TDS deduction:
- A resident’s National Defence Bond has an interest rate of 4.25%.
- National Défense Loans were obtained between 1968 and 1972, with a 4.25% interest rate.
- On the National Défense Loan, interest is due.
- Interest is paid on some registered debentures issued by institutions, authorities, public-sector businesses, or cooperative societies.
- Interest due to specific businesses set up under the General Insurance Business Act or to any other insurer.
- According to the rules of the Securities Contracts (Regulation) Act, 1956, interest is payable on any dematerialized security issued by a corporation as long as the instrument is listed on a reputable stock exchange.
- Interest on a 7-year National Savings Certificate is paid.
- If the amount of interest is limited to Rs. 5000 and the corporation deposits the interest using an account payee check, interest is due on debentures that are issued by a company in which the general public is significantly engaged (applicable for resident individuals, resident, or HUF).
- Interest that is past due on any bond issued by the federal government or a state government if the interest does not exceed Rs. 10,000 in a fiscal year.
- Interest is paid on 7.5% gold bonds issued in 1980 or 6.5 percent gold bonds issued in 1977 held by residents if the nominal value of all such bonds during the applicable period does not exceed Rs. 10,000.
- The payee has issued Form No. 15G/15H, which does not belong to a company or a firm.
- A certificate that allows for little to no tax deduction is held in the care of the payee.
