Section 193: TDS on Interest on Securities

The first thing which comes to everyone’s mind is “what is interest on securities?”. As per section 2(28B) of Income Tax Act, “interest on securities” means any interest on security (issued by the government whether state or central) and interest on debentures/securities (issued by the company a corporation or local authority established by Central, State or Provincial act).

Hence, any such interest income as received above will attract tax deduction u/s 193.

Further, the provisions of this section of TDS are as follows:

Who is required to deduct TDS u/s 193?

Any person who is giving interest income on securities to a resident is required to deduct tax before releasing the interest amount.

What is the rate & time of tax deduction u/s 193?

The rate of tax u/s 193 is 10%. The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).

No requirement of TDS u/s 193 in following cases:

As per the Income Tax Act, there exist some situations which do not require any tax deduction in this section. Let’s discuss it as follows-

  • Interest payable on debentures issued by the notified institution, authority, public sector company or co-operative society.
  • Interest payable to a residential individual/HUF on debentures issued by a public company. Such interest amount does not exceed ?5000 (in a financial year) and is paid through an account payee cheque.
  • Interest payable to LIC/ other insurers on securities owned by them or in which they have full beneficial interest.
  • Interest payable on security (which is in demat form) issued by a company listed on stock exchange in India

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.