SECTION 194A – INTEREST OTHER THAN “INTEREST ON SECURITIES”
The Finance Act, 1995, has enlarged the ambit of deduction of tax at source by amending sections 194A and 194C of the Income-tax Act, 1961, and by inserting sections 194J and 194K in the Act. As a result of these changes, deduction of tax at source is also required to be made from :—
(i) payments of Rs. 20,000 and above made by way of fees for professional and technical services;
(ii) payments in pursuance of contracts of Rs. 20,000 and above for advertising, broadcasting, telecasting, transport of goods and passengers and catering;
(iii) payments of interest of Rs. 10,000 and above on Time Deposits with a bank branch; and
(iv) income of Rs. 10,000 and above from units of Mutual Funds or of the Unit Trust of India.
The changes are likely to affect a large number of persons some of whom may not have taxable income. Persons having income below taxable limit may apply to the Assessing Officers for issue of certificates for non-deduction of tax. There may also be cases where assessees may apply for deduction of tax at a lower rate. Provision has also been made for making suo motu declarations to the payers for non-deduction of tax from interest on time deposits and income in respect of units.
|Sl. No.||Form No.||Subject||Remarks|
|1.||13||Application by a person for a certificate under section 197(1) for no deduction of tax or deduction at lower rates.||Amended to include income in respect of units.|
|2.||15AA||Certificate by the Assessing Officer under section 197(1)||– do –|
|3.||15H||Declaration under section 197A- (1A) for claiming receipt of interest other than “interest on securities” and income in respect of units.||Amended to include income in respect of units.|
|4.||16A||Certificate of deduction of tax at source under section 203||Amended to include fees for professional or technical services and income in respect of units.|
|5.||26||Annual return of deduction of tax from dividends/income in respect of units under section 206.||Amended to include income in respect of units.|
|6.||26K||Annual return of deduction of tax from fees for professional or technical services under section 206.||Inserted in view of section 194J.|
(i) an application received for non-deduction of tax or deduction of tax at a lower rate should be disposed off at the earliest;
(ii) the requisite forms of declaration to the payer or for issue of certificate of non-deduction of tax or deduction of tax at lower rate, etc., should be made available in the income-tax offices, bank counters, post offices, UTI counters, etc.; and
(iii) the grievances, if any, relating to the implementation of provisions of tax deduction at source should be redressed promptly.
Circular : No. 716, dated 9-8-1995.