TDS on Interest on Securities

Interest on securities

Any person responsible for paying an interest on securities to a resident is required to deduct tax at source at the rates in force for the concerned financial year.

1. Person Responsible for Paying Interest on Securities

Following are treated as persons responsible for paying interest on securities -

a) Interest payable by Central/State Government  – The appropriate disbursing officer

b) Interest payable by any other person                        - Company/Authority and the principal officer thereof

2. Time of Deduction of Tax at Source

TDS on interest on securities is to be deducted -

a) At the time of credit of such income to the account of payee; or

b) At the time of payment of interest on securities by cash or cheque

Whichever is earlier.

Note - For this purpose, any sum credited to any account called ‘suspense account’ or ‘any other account’ shall be treated as credit of such income to the account of payee.

3. Deposit of Tax deducted at Source

Tax deducted at source has to be deposited to the credit of Central Government within prescribed time limits.

S.No. Particulars Time of Deposit of TDS
1 Tax is deducted by office of Government and tax is paid without production of challan On the same day on which the tax is deducted
2 Tax is deducted by office of Government and tax is accompanied by income tax challan Within 7 days from the end of month in which TDS is deducted.
3 Tax deducted by any other person a) For the month of March – April 30th b) Otherwise – Within 7 days from the end of month in which the TDS is deducted

4. Issue of Certificate of TDS in Form 16A

Person deducting TDS under Section 193 shall issue TDS certificate in Form 16 A to deductee within prescribed time period.

S.No. Different Quarters Tax deducted by office of Government Tax deducted by any other person
1 Quarter Ending June 30th On or before August 15th On or before July 30th
2 Quarter Ending September 30th On or before November 15th On or before October 30th
3 Quarter Ending December 31st On or before February 15th On or before January 30th
4 Quarter Ending March 31st On or before May 30th On or before May 30th

5. Submission of Quarterly Return

a) Deductor has to furnish quarterly return of TDS in Form 26Q to the government.

b) A control chart in Form 27 A is submitted along with Form 26Q.

6. Rate of TDS

TDS @ 10% is to be deducted while paying interest on securities. No Education Cess, SHEC, Surcharge needs to be deducted.

Recommended Read –

Forms and Due Dates for filing TDS return

Consequences of late filing of TDS Return

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