SECTION 193
DEDUCTION OF TAX AT SOURCE – INTEREST ON SECURITIES
Tax is required to be deducted at source under section 193 or section 195.
Interest on deep discount bonds – Tax is required to be deducted at source under section 193 or section 195, as the case may be, only at the time of redemption of Deep Discount Bonds, irrespective of whether the income from the bonds has been declared by the bond-holder on accrual basis from year to year or is declared only in the year of redemption. It is further clarified that a person, who has declared the income from a Deep Discount Bonds on annual accrual basis during the term of the bond, will be entitled to make an application under section 197 of the Income Tax Act, requesting the assessing officer to issue a certificate for no deduction of tax or deduction at a lower rate. In such a case, the assessee should furnish, along with the prescribe Form No. 13, details of the income offered for tax by him from year to year. In case the assessee is not the original subscriber, and has acquired the bond from some other person, he shall furnish the relevant particulars including the name, address and PAN, of such other person. If the assessing officer is satisfied that the application assessee has declared his income from the bonds from year to year on accrual basis during the period the bond was held by him, he shall issue a certificate allowing the tax deduction at source at such reduced rate as is justified by the total income of the applicant in the year of redemption.
Similarly, an assessee being a resident individual, who is the original subscriber of a Deep Discount Bond, may furnish a declaration in Form No. 15H in accordance with section 197A, if he has been declaring income on the bond from year to year on accrual basis, and no tax is payable on his total income, including the interest accruing during the year, in the year of redemption. However, such a declaration cannot be filed by an individual, other than a senior citizen availing tax rebate under section 88B, if the amount of accumulated interest, being paid on redemption, exceeds the maximum amount not chargeable to tax in his case.
Notified bond u/s 193, proviso (iv)- The Government of India, hereby notifies that pursuant to the amendment to clause(iv) of the proviso to section 193, with effect from June1,2007, tax will be deducted at source on the interest exceeding Rs.10,000 payable during the financial year on 8% Saving (Taxable) Bond, 2003.
