Understanding Section 193 of the Income Tax Act: TDS on Interest
Learn about Section 193 of the Income Tax Act and its implications for TDS on interest payments. Essential for tax compliance.
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Section 193 of the Income Tax Act pertains to the tax deduction at source (TDS) on interest on securities. Under this section, those responsible for paying interest on securities must deduct TDS at the specified rates if the interest exceeds a certain threshold during a fiscal year. Exceptions include interest on certain government securities and interest paid to the Reserve Bank of India. It's important for entities to comply with TDS provisions to avoid penalties.
FAQs & Answers
- What is Section 193 of the Income Tax Act? Section 193 of the Income Tax Act relates to tax deduction at source (TDS) on interest earned from securities. Entities paying interest must deduct TDS at specific rates if the interest exceeds defined thresholds during a fiscal year.
- Who is responsible for deducting TDS under Section 193? The entities or individuals responsible for paying interest on securities are required to deduct TDS under Section 193 before making the interest payment to the recipient.
- Are there any exceptions to TDS under Section 193? Yes, exceptions include interest on certain government securities and interest paid to the Reserve Bank of India, which do not require TDS deductions.
- What are the penalties for non-compliance with Section 193? Entities that fail to comply with TDS provisions under Section 193 may be subject to penalties under the Income Tax Act, which can include fines or interest on the unpaid tax.