Section 193 Of The Income Tax Act: TDS Deduction Rate Under Section 193
Section 193 of the Income Tax Act talks about the provisions regarding tax deducted at source or TDS on any interest earned from securities. According to the norms of this section, the tax is deducted either while the payment is being made or at the time of credit of interest. Individuals liable to pay interest on securities to a resident will deduct TDS under section 193.
Now, to know more about the intricacies of Section 193 of income tax act, keep on reading!
Tax Deduction Rate Under Section 193
As per the clauses of this section, if PAN is furnished, deductors are supposed to deduct tax at 10% rate from the interest sum. Similarly, for those who fail to furnish their PAN, deductors will be liable to deduct tax at the higher of these following rates:
- At 20% rate
- Higher than what is stated in the relevant clause of the Income Tax Act
- Higher than the usual rates (in accordance with clauses of the updated Finance Act)
Also Read: 194A Of Income Tax Act
Besides learning about the deduction rates under Section 193 of Income Tax Act, you should also know the due dates of depositing tax deducted at source to the government. Find the tabular representation of that information below:
| Circumstance | Time of Depositing TDS |
| When the credited amount reaches your account in March | Before May 1 |
| In case the amount is credited in any other month | Within 7 days following the end of the month in which the deduction took place |
Who Should Deduct TDS Under Section 193?
Any responsible authority paying interest on securities to a resident should deduct TDS under Section 193.
Penalty for Late Payment of TDS Under Section 193
If the tax deductor fails to pay or deduct the TDS amount on time, there will be certain penalties imposed on the person. Find the details below:
When there is a delay in deducting TDS
Given a scenario where the deductor has deducted the TDS, but it has not reached the government yet, interest will be imposed at 1%/ month or its part thereof.
When there is a delay in paying TDS
The interest penalty rate will be 1.5%/month or its part thereof in case of delayed remittance of that TDS amount.
Also Read: Section 194C Of The Income Tax Act
Due Date for TDS Deposition Under Section 193
The deducted TDS should be deposited within 7 days from the month in which it was deducted. However, TDS deducted in March should be deposited within April 30.
TDS Certificate Issuance Under Section 193
The person responsible for deducting TDS should issue TDS certificate within the following dates in Form 16A
· For 1st quarter (April to June) – August 15
· For 2nd quarter (July to September) – November 15
· For 3rd quarter (October to December) – February 15
· For 4th quarter (January to March) – June 15
Furnish TDS Return under Section 193
The deductor should file quarterly return within the following dates in Form 26Q
· April to June – July 31
· July to September – October 31
· October to December – January 31
· January to March – May 31
Zero Requirement of TDS Under Section 193 of The Income Tax Act
Note that TDS does not get deducted under certain circumstances. Here are some situations in which TDS deduction will not be required under Section 193 of the Income Tax Act.
- Interest that needs to be paid on debentures issued by public sector organizations, authorities, co-operative societies, etc.
- Interest on National Savings Certificate (7 years)
- Interest owed to insurers like LIC or others on securities that they own or have complete beneficial interest on
- Interest payable on company’s securities that are listed on stock exchanges
- Interest on the National Development Bonds
- Interest on 4% National Defense Bonds, 1972 that a resident individual possesses
- Interest on securities that a General Insurance Corporation owns
- Interest on any Central/State Government security
Apart from these, in the case of 8% saving bonds, TDS deduction will not be applicable up to a specific amount (Rs. 10,000).
Final Word
Since you have a better understanding of what Section 193 of the Income Tax Act deals with and the time limit for tax payment discussed above, follow the instructions to avoid penalties. Furthermore, note that deductors need to mention all the details of TDS payments and file returns on a quarterly basis.
FAQs on Section 193 of the Income Tax Act
Ans: If you see that the tax deducted is not the same as the tax payable by you, you can file income tax return and claim the excess as refund. The following are the ways in which you can claim TDS return on fixed deposits.
· If your income is less than the minimum exemption limit, then you should submit Form 15G at the beginning of the financial year to let the bank know that your income doesn’t come under the taxable income slab. Hence, no TDS will be deducted on your interest income.
· If even after submitting Form 15G, the bank deducts TDS on your interest income, then you can claim the excess TDS as refund by filing your income tax return.
Ans: There is a certificate every assessee needs to obtain in order to claim low or nil deduction. This is the document that allows such facilities and can be acquired from the assessing officer. All you have to do is submit an application in Form 13 to obtain it.
Ans: In such cases, the non-resident Indian is liable to pay TDS to the government as well. If one receives such earnings between May 14 2020, and March 31 2021, the TDS rate applicable will be 10%.
Ans: If a person is about to receive interest at the time of interest accrual is unidentifiable, the assessee does not have to deduct TDS under Section 193. Moreover, the assessee does not need to worry about penalties under section 201 when this happens.
Ans: Interest income where Section 193 applies will result in higher TDS charges if payee’s PAN information is missing. Note that in such cases, a TDS deduction of 20% on the interest income will be applicable.
Ans: As per Section 193, there shouldn’t be any TDS deduction on interest payable on any government (both State and Central) security. However, you can find an exception with regard to this clause. TDS gets deducted in case the interest payable on two kinds of securities during a specific financial year crosses Rs. 10,000. These are as follows:
a) 8% Savings (Taxable) Bonds, 2003
b) 7.5% Savings (Taxable) Bonds, 2018
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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