Interest on securities
19Interest on securities.
193. The person responsible for paying any income chargeable under the head "Interest on securities" shall, at the time of payment, deduct income-tax 20[* * *] at the rates in force on the amount of the interest payable:
21[Provided that no tax shall be deducted from—
(i) any interest payable on 4¼ per cent National Defence Bonds, 1972, where the bonds are held by an individual, not being a non-resident; or
22[(ia) any interest payable to an individual on 4¼ per cent National Defence Loan, 1968, or 4¼ per cent National Defence Loan, 1972; or]
23[(ib) any interest payable on National Development Bonds; or]
(ii) any interest payable on National Savings Certificates (First Issue); or
24[(iia) any interest payable on 7-Year National Savings Certificates (IV Issue); or]
25[(iib) any interest payable on such debentures, issued by any institution or authority, or any public sector company, or any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank), as the Central Government may, by notification in the Official Gazette, specify26 in this behalf.]
27[***](iii) any interest payable on 6½ per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, where the Bonds are held by an individual not being a non-resident, and the holder thereof makes a declaration in writing before the person responsible for paying the interest that the total nominal value of the 6½ per cent Gold Bonds, 1977, or, as the case may be, the 7 per cent Gold Bonds, 1980, held by him (including such bonds, if any, held on his behalf by any other person) did not in either case exceed ten thousand rupees at any time during the period to which the interest relates;
28[(iiia) any interest payable on such securities of the Central Government or a State Government, to such class of persons, and subject to such conditions, as the Central Government may, by notification29 in the Official Gazette, specify in this behalf;]
30[(iv) any interest payable on any other security of the Central or State Government, where the security is held by an individual, not being a non-resident, and the holder thereof makes a declaration in writing before the person responsible for paying the interest that—
(a) he has not previously been assessed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922);
(b) his total income of the previous year in which the interest is due is not likely to exceed the maximum amount not chargeable to tax; and
(c) the total nominal value of the securities held by him (including such securities, if any, as are held on his behalf by any other person) did not exceed two thousand five hundred rupees at any time during the said previous year.]]
31[(v) any interest payable to an individual, who is resident in India, on debentures issued by a company in which the public are substantially interested, being debentures listed on a recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and any rules made thereunder, if—
(a) the interest is paid by the company by an account payee cheque; and
(b) the amount of such interest or, as the case may be, the aggregate of the amounts of such interest paid or likely to be paid during the financial year by the company to such individual does not exceed one thousand rupees.]
32[***]
19. See rule 37(1) and Form No. 25.
20. "and super-tax" omitted by the Finance Act, 1965, w.e.f. 1-4-1965.
21. Substituted by the Finance (No. 2) Act, 1965, w.e.f. 11-9-1965. Original proviso was inserted by the Taxation Laws (Amendment) Act, 1962, w.e.f. 13-12-1962.
22. Inserted by the Taxation Laws (Amendment & Miscellaneous Provisions) Act, 1965, w.e.f. 4-12-1965.
23. Inserted by the Finance Act, 1978, w.e.f. 1-4-1978.
24. Inserted by the Finance Act, 1970, w.e.f. 1-4-1970.
25. Substituted for the following clause (iib), which was inserted by the Finance Act, 1970, w.e.f. 1-4-1970, by the Finance Act, 1986, w.e.f. 1-6-1986 :
"(iib) any interest payable on such debentures, issued by any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank) or any other institution or authority, as the Central Government may, by notification in the Official Gazette, specify in this behalf; or"
26. For specified debentures, refer Taxmann's Direct Taxes Circulars, Vol. 1, 1985 edn., pp. 540-541 and 1113-14, and Taxmann's Yearly Tax Digest & Referencer, 1987 edn., p. 3.116.
27. Explanation omittedby the Finance Act, 1987, w.e.f. 1-4-1987. Omitted Explanation, whichwas part of clause (iib) of the proviso as substituted by the Finance Act, 1986, w.e.f. 1-4-1986, read as under:
Explanation : For the purposes of this clause, "public sector company" means any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); or"
28. Inserted by the Finance Act, 1982, w.e.f. 1-6-1982.
29. See Notification No. SO 5651, dated 4-12-1985 reproduced in Taxmann's Yearly Tax Digest & Referencer, 1987 edn., p. 3.116.
30. Inserted by the Finance Act, 1966, w.e.f. 1-4-1966.
31. Inserted by the Finance Act, 1984, w.e.f. 1-6-1984.
32. Explanation, which was inserted by the Finance Act, 1965, w.e.f. 1-4-1965, omitted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
[AS AMENDED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987]