1) Who is responsible to deduct tax under section 196C of Income Tax Act, 1961?
Any person responsible for making payment to Non-resident.
2) Nature of Payment
(a) Interest on notified bonds referred to in section 115AC
(b) Dividends on Global Depository Receipts referred to in section 115AC
(c) Long-term capital gain arising from transfer of such bonds or Global Depository Receipts
3) When to Deduct TDS under Section 196C?
At the time of credit of such income to the account of payee or at the time of payment, whichever is earlier.
For this purpose, “payment” can be in cash or by issue of a cheque or draft of by any other mode.
4) Rate of TDS under Section 196C
The rate of tax deduction u/s 1946C is 10%(+ SC+H&E Cess)
5) Other key point related to Section 196C
No deduction shall be made in respect of dividend referred to in section 115-O.
Extract of Section 196C of Income Tax Act, 1961
Section 196C TDS on Income from foreign currency bonds or GDRs
196C. Where any income by way of interest or dividends in respect of bonds or Global Depository Receipts referred to in section 115AC or by way of long-term capital gains arising from the transfer of such bonds or Global Depository Receipts is payable to a non-resident, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof 24[by any mode], whichever is earlier, deduct income-tax thereon at the rate of ten per cent. [***]
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