written by | May 18, 2022

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Table of content


Table of content

What Is Section 193 in TDS?

When it comes to economics, trading, and business, several terms and conditions are imposed on every procedure, especially over the revenue transaction. The transaction of a large amount takes place, which could be in terms of salary, income, interest over securities, stock exchange security, etc. A certain amount of tax is imposed on these transactions. These taxes are decided by the central government, state government, an authority company, a cooperative society, etc. Any individual earning a certain amount of money as a salary or revenue has to pay their taxes. 

The Income Tax Act is a mandatory law for citizens. This act consists of several sections under which residential or non-residential individuals must pay taxes on their revenue, income, salary, etc. One of the essential sections of the Income Tax Act is section 193, which imposes a tax deduction over the income before the transaction occurs, i.e., before transferring the money into the receiver's account. There are certain interests over which TDS section 193 is not applicable. Section 193 of the Income Tax Act is implemented over the interest on securities before the payment transaction towards the receiver. However, there are several interests over which section 193 is not imposed.

Did you know?

To fill the treasury, the first Income Tax Act was introduced in February 1860 by Sir James Wilson, who was British India's first finance minister.

Provision Under Section 193

According to the Income Tax Act, there are several sections under which the tax deduction occurs. The TDS is defined as the tax duction protocol where the tax is deducted immediately during any payment transaction. 

The TDS Section 193 is basically implemented over the Interest on securities. Considering an individual is transferring an amount in the form of Interest on the securities, there must be a certain amount of tax deducted according to the implementation of Section 193 TDS rate

The security interest can be categorised into two groups. The government and the security that the company implements, people in business, authority, or corporation under which that individual is working for. In the case of transferring income, the tax deducted according to the Interest on the securities will be implemented before transferring the income to the individual. Therefore, an individual's amount is the cut-off payment after the tax deduction.

Also Read: What is Tax Deducted at Source, Deduction Rules & Payment Method

TDS on Securities Earnings

The Deductor is obligated to collect TDS at a rate of 10%. Nevertheless, if the payee refuses to provide his Permanent Account Number, the Deductor will be required to subtract TDS at the highest income tax rate. The day on which TDS on income on assets is deducted — The Deductor is obliged to withdraw TDS sooner of the following events: when income is credited to the payee's account; or when payment is made in credit, cash, draft, or any other means.

Deadline for Depositing TDS on Securities Interest

Section 193 of the Income Tax Act requires the Deductor collecting TDS on interest on shares to pay the recovered TDS before seven days of another month where the TDS is deducted. Furthermore, the TDS for the period of March must be deposited by April 30th.

TDS Certificate Issuance

A deductor who is obligated to collect TDS under section 193 of the Income Tax Act must issue a Credit note in Form 16A by the below dates. – 

  • April to June – August 15th
  • July to September – November 15th 
  • October to December – February 15th 
  • July until September – November 15th

TDS Return Filing

A charge and discharge cycle which is obligated to take tax under section 193 of the Income Tax Act must file a periodic report on Form 26Q by the deadlines listed below:

  • April – June – July 31st 
  • July – September – October 31st 
  • From October to December - January 31st 
  • January through March-May 31st

Penalties Under the Violation of Section 193

Several penalties are also implemented for the violation of Section 193. The penalties are conducted in two categories:

  • Due to late deduction 
  • Due to late payment

Each of these penalties has different charges that are imposed as a monthly based fine over the total amount.

TDS under Section 193 does not apply to individuals that are not residents of earning nations. Therefore, there are several conditions under which there can be a consideration for exemption under Section 193. 

When it comes to the payment of the income or any amount to the non-resident individuals, the tax deduction is considered according to Section 193. It must be kept in mind that the tax deduction is done before the payment and not after the payment is made. Though, there are several Interests over which tax reduction is not applicable, including the Interest over the insurance company, Interest issued by any cooperative society, Interest over Stock Exchange, Interest over gold bonds, etc.

List of Interests to Which Section 193 Is Not Applicable

According to the Income Tax Act, there are several situations and conditions under which section 193 TDS rate is not applicable over the amount of income. Some of these conditions are.

  1. All of the Interests that are liable to any life insurance company or any insurer are not applicable for a tax deduction. 
  2. Any interest that is implemented over the income by an authority, a cooperative society, a public sector, or any notified institution is free from any tax deduction. 
  3. Any interest imposed over the Stock Exchange is under the consideration of Demat form. They are not liable for any TDS on interest on securities.
  4. There will be no tax deduction over the Interest implemented over the individual who owns a 7-year National Savings Certificate, also termed the “IV issue”.
  5. All of the Interests that are imposed over the national development bonds are also free from any tax deduction.
  6. Suppose an individual applies for the National Defense loan. Therefore, the Interest imposed on the 4% National Defense Loan of 1968 or of 1972, there will be no tax deduction.
  7. A non-resident individual imposing a 4% National Defense bond of 1972 will be liable for the deduction-free transaction.
  8. All of the Interest that is issued by the General Insurance Corporation or any interest issued by such an insurer that has a full beneficial effect over the amount is free from the tax deduction. 
  9. All of the Interest imposed over the gold bonds, whether it could be a 6% Gold Bond of 1977 or a 7% Gold Bond of 1980, will not be imposed by any tax deduction. However, the bond limit of these gold bonds must not exceed the value of ₹10,000
  10. Any interest that the central government or state government imposes will be free from the tax deduction.

Also Read: Form 26Q: TDS Return Filing for Non-Salary Deductions

Section 193 Exemption Limitation

Several exemptions have a limit under section 193 of the Income Tax act. There will be no action of TDS over several cases. Some of them are.

  • When any listed company issues the venture or revenue, no TDS will be deducted in such cases. However, the TDS exemption limit is ₹1000, which will be given through a payee cheque.
  • If a bond is signed, i.e., a savings bond of 8% up to an amount of ₹10,000. In such cases, there will be an exemption over the TDS protocol. 
  • Any employees who have issued a 15 G/15 H form will be free from any tax deduction. Similarly, if an individual has a certificate of custody, no tax deduction will be applicable over the Interest.

Conclusion

According to the Income Tax Act, there are several sections under which the tax is implemented over a certain amount of money. This money could be an interest in security, salaries, revenue, etc. One of the basic considerations under the Income Tax Act is section 193, in which the income or salary paid to a resident individual has to be deducted before the transaction, according to the tax implemented or imposed over that certain amount, by the central government or by any listed company. However, several conditions and terms under which several interests do not experience any deduction, including the gold bonds, National Defence Loan, and any interest issued by the Life Insurance Corporation, have a full beneficial effect on that interest. Moreover, the tax imposed over a certain amount is mandatory for every individual to pay. Several penalties are issued over the violation of the TDS section 193, which can be categorised as late deduction charges and late payment charges. 
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FAQs

Q: What is the Income Tax Act?

Ans:

The Income Tax Act was enacted in 1961, under which several taxes were issued and imposed over a certain amount of money that is earned by an individual, whether it is a resident or non-resident of a particular nation. The Income Tax Act imposes several sections on the tax deduction, including section 193, section 195, etc., to explain the rules and regulations for the taxation. The government of that particular nation determines the section 193 TDS rate.

Q: What do you mean by TDS?

Ans:

The TDS is the tax deduction protocol implemented over any amount of money that is being transacted between individuals. This amount can be considered an income, salary, security, interest, etc. The tax payment over this amount is mandatory for every nation's citizens. Several sections under TDS guide the rules for a tax deduction, including Section 195, Section 193 in Income Tax Act, etc.

Q: What is the interest over which no deduction is applied?

Ans:

Several interests under TDS section 193 are not liable for a tax deduction. Some of these interests include interest implemented over the income by any authority, interest applicable over the stock exchange, interest liable to any insurance company, All the Interest related to the gold bonds, the National Defence Bond, etc. Similarly, the interest imposed by the central or state government is a fee from any tax deduction.

Q: What is section 193 of the Income Tax Act?

Ans:

According to the Income Tax Act, section 193 is the tax deduction over the salary income considered as interest on securities. These tax deductions are made before the transaction of the amount to the receiver, i.e., the receiver will receive the amount after the tax deduction. The tax rate is decided and imposed by the central or state government. However, there are several interests over which section 193 is not imposed.

Q: What is the penalty imposed over the delay of the TDS?

Ans:

The penalties imposed over the delay of the TDS on interest on securities depend basically upon two matters. The penalty charge is 1% of the TDS since the date of the application of the tax per month. Due to the late payment, a penalty is imposed of up to 1.5% of the TDS per month.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.