Dividends | Income-Tax Act, 1961 | Bare Acts | Law Library

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The Income-Tax Act, 1961

194. Dividends.-

The principal officer of an Indian company or a company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India, shall, before making any payment in cash or before issuing any cheque or warrant in respect of any dividend or before making any distribution or payment to a shareholder, ¹[who is resident in India,] of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend, income-tax 2*** at the rates in force:

³[Provided that no such deduction shall be made in the case of a shareholder, being an individual, if-

(a) the dividend is paid by the company by an account payee cheque; and

(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such dividend distributed or paid or likely to be distributed or paid during the financial year by the company to the shareholder, does not exceed ⁴[two thousand five hundred rupees]:

Provided further that the provisions of this section shall not apply to such income credited or paid to-

(a) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial interest;

(b) the General Insurance Corporation of India (hereafter in this proviso referred to as the Corporation) or to any of the four companies (hereafter in this proviso referred to as such company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares owned by the Corporation or such company or in which the Corporation or such company has full beneficial interest;

⁵[Provided also that no such deduction shall be made in respect of any dividends referred to in section 115-O.]

1. Ins. by Act 49 of 1991, s. 51 (w.e.f. 1-10-1991).

2. The words "and super-tax" omitted by Act 10 of 1965 (w.e.f. 1-4-1965).

3. Subs. by Act 20 of 2002, s. 73, for the first and second provisos (w.e.f. 1-6-2002).

4.Subs. by Act 32 of 2003, s. 73, for "one thousand rupees" (w.e.f. 1-8-2002).

5. Ins. by s. 73, ibid. (w.e.f. 1-4-2003).

⁶[194A. Interest other than "Interest on securities".-

(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income by way of interest on securities, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force:

⁷[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]

⁸[Explanation.-For the purposes of this section, where any income by way of interest as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

(3) The provisions of sub-section (1) shall not apply-

²[(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, ³[does not exceed-

(a) ⁴[forty thousand] rupees, where the payer is a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution, referred to in section 51 of that Act);

(b) ⁴[forty thousand] thousand rupees, where the payer is a co-operative society engaged in carrying on the business of banking;

(c) ⁴[forty thousand] rupees, on any deposit with post office under any scheme framed by the Central Government and notified by it in this behalf; and (d) five thousand rupees in any other case]:]

⁵[Provided that in respect of the income credited or paid in respect of-

(a) time deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or

(b) time deposits with a co-operative society engaged in carrying on the business of banking;

(c) deposits with a public company which is formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India ⁶[for residential purposes and which is eligible for deduction under clause (viii) of sub-section (1) of section 36] 7***; 8*** the aforesaid amount shall be computed with reference to the income credited or paid by a branch of the banking company or the co-operative society or the public company, as the case may be:]

⁹[Provided further that the amount referred to in the first proviso shall be computed with reference to the income credited or paid by the banking company or the co-operative society or the public company, as the case may be, where such banking company or the co-operative society or the public company has adopted core banking solutions;]

¹[Provided also that in case of payee being a senior citizen, the provisions of sub-clause (a), sub-clause (b), and sub-clause (c) shall have effect as if for the words "²[forty thousand] thousand rupees", the words "fifty thousand rupees" had been substituted.

Explanation.-For the purposes of this clause, "senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year;]

(iii) to such income credited or paid to-

(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or

(b) any financial corporation established by or under a Central, State or Provincial Act, or

(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or

(e) any company or co-operative society carrying on the business of insurance, or

(f) such other institution, association or body ⁴[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette;

⁵[(iv) to such income credited or paid by a firm to a partner of the firm;]

(v) to such income credited or ⁶[paid by a co-operative society (other than a co-operative bank) to a member thereof or to such income credited or paid by a co-operative society] to any other co-operative society;]

⁷[Explanation.-For the purposes of this clause, "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949);]

⁸[(vi) to such income credited or paid in respect of deposits under any scheme framed by the Central Government and notified by it in this behalf in the Official Gazette;

⁹[(vii) to such income credited or paid in respect of deposits (other than time deposits made on or after the 1st day of July, 1995) with a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(viia) to such income credited or paid in respect of,-

(a) deposits with a primary agricultural credit society or a primary credit society or a cooperative land mortgage bank or a co-operative land development bank;

(b) deposits (other than time deposits made on or after the 1st day of July, 1995) with a cooperative society, other than a co-operative society or bank referred to in sub-clause (a), engaged in carrying on the business of banking;]]

¹[(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974);]

²[(ix) to such income credited by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal;

(ixa) to such income paid by way of interest on the compensation amount awarded by the Motor Accidents Claims Tribunal where the amount of such income or, as the case may be, the aggregate of the amounts of such income paid during the financial year does not exceed fifty thousand rupees;]

³[(x) to such income which is paid or payable by an infrastructure capital company or infrastructure capital fund or a public sector company ⁴[or scheduled bank] in relation to a zero coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company ⁴[or scheduled bank];]

⁵[(xi) to any income by way of interest referred to in clause (23FC) of section 10.]

⁶[Explanation 1.-For the purposes of clauses (i), (vii) and (viia), "time deposits" means deposits (⁷[including] recurring deposits) repayable on the expiry of fixed periods.

¹[(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.]

6. Ins. by Act 20 of 1967, s. 30 (w.e.f. 1-4-1967).

7. Ins. by Act 20 of 2002, s. 74 (w.e.f. 1-6-2002).

8. Ins. by Act 11 of 1987, s. 47 (w.e.f. 1-6-1987).

1. Sub-section (2) omitted by Act 18 of 1992, s. 71 (w.e.f. 1-6-1992).

2. Subs. by Act 25 of 1975, s. 20, for clause (i) (w.e.f. 1-4-1975).

3. Subs. by Act 22 of 2007, s. 53, for "does not exceed five thousand rupees" (w.e.f. 1-6-2007).

4. Subs. by Act 7 of 2019, s. 9, for "ten thousand" (w.e.f. 1-4-2019).

5. Subs. by Act 33 of 1996, s. 49, for the proviso (w.e.f. 1-10-1996).

6. Subs. by Act 10 of 2000, s. 60, for "for residential purposes" (w.e.f. 1-4-2000).

7. The certain words, brackets and figures omitted by Act 27 of 1999, s. 69 (w.e.f. 1-4-2000).

8. The certain words omitted by Act 14 of 2001, s. 69 (w.e.f. 1-6-2001).

9. Ins. by Act 20 of 2015, s. 43 (w.e.f. 1-6-2015).

1. Ins. by Act 13 of 2018, s. 49 (w.e.f. 1-4-2018).

2. Subs. by Act 7 of 2019, s. 9, for "ten thousand" (w.e.f. 1-4-2019).

3. Clause (ii) omitted by Act 27 of 1999, s. 69 (w.e.f. 1-4-2000).

4. Ins. by Act 19 of 1968, s. 14 (w.e.f. 1-4-1968).

5. Ins. by Act 3 of 1989, s. 30 (w.e.f. 1-4-1988). Which was omitted by Act 4 of 1988, s. 73 (w.e.f. 1-4-1988). Original clause (iv) was inserted by Act 19 of 1968, s. 14 (w.e.f. 1-4-1968).

6. Subs. by Act 20 of 2015, s. 43, for "paid by co-operative society to a member thereof or" (w.e.f. 1-6-2015).

7. Ins. by s. 43, ibid. (w.e.f. 1-6-2015).

8. Ins. by Act 19 of 1970, s. 23 (w.e.f. 1-4-1970).

9. Subs. by Act 22 of 1995, s. 33, for clause (vii) (w.e.f. 1-7-1995).

1. Ins. by Act 25 of 1975, s. 20 (w.e.f. 1-4-1975).

2. Subs. by Act 20 of 2015, s. 43, for clause (ix) (w.e.f. 1-6-2015).

3. Ins. by Act 18 of 2005, s. 48 (w.e.f. 1-6-2005).

4. Ins. by Act 33 of 2009, s. 60 (w.e.f. 1-4-2009).

5. Ins. by Act 25 of 2014, s. 56 (w.e.f. 1-10-2014).

6. Subs. by Act 18 of 2005, s. 48, for the Explanation (w.e.f. 1-6-2005).

7. Subs. by Act 20 of 2015, s. 43, for "excluding" (w.e.f. 1-6-2015).

8. Explanation 2 omitted by Act 21 of 2006 s. 40 (w.e.f. 1-4-2006).

9. The Explanation omitted by Act 18 of 1992, s. 71 (w.e.f. 1-6-1992).

¹[194B. Winnings from lottery or crossword puzzle.-

The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle ²[or card game and other game of any sort] in an amount exceeding ³[ten thousand rupees] shall, at the time of payment thereof, deduct income-tax thereon at the rates in force:

⁵[⁶[Providedthat] in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.]

1. Ins. by Act 16 of 1972, s. 28 (w.e.f. 1-4-1975).

2. Ins. by Act 14 of 2001, s. 70 (w.e.f. 1-6-2001).

3. Subs. by Act 14 of 2010, s. 35, for "five thousands rupees" (w.e.f. 1-7-2010). Earlier substituted by Act 26 of 1986, s. 30, for "one thousands rupees" (w.e.f. 1-6-1986).

4. The proviso omitted by Act 27 of 1999, s. 70 (w.e.f. 1-4-2000).

5. Ins. by Act 26 of 1997, s. 48 (w.e.f. 1-6-1997).

6. Subs. by Act 27 of 1999, s. 70, "Provided futher that" (w.e.f. 1-4-2000).

⁷[194BB. Winnings from horse race.-

Any person, being a bookmaker or a person to whom a licence has been granted by the Government under any law for the time being in force for horse racing in any race course or for arranging for wagering or betting in any race course, who is responsible for paying to any person any income by way of winnings from any horse race in an amount exceeding ⁸[ten thousand rupees] shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.

4. The proviso omitted by Act 27 of 1999, s. 70 (w.e.f. 1-4-2000).

7. Ins. by Act 19 of 1978, s. 21 (w.e.f. 1-4-1978).

8. Subs. by Act 28 of 2016, s. 73, for "five thousand rupees" (w.e.f. 1-6-2016).

⁹[194C. Payments to contractors.-

(1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to-

(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;

(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source-

(i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or

(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.

(4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.

(5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed ¹[thirty thousand rupees]:

Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds ²[one lakh rupees], the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.

(6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, ³[where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with] his Permanent Account Number, to the person paying or crediting such sum.

(7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed.

Explanation.-For the purposes of this section,-

(i) "specified person" shall mean,-

(a) the Central Government or any State Government; or

(b) any local authority; or

(d) any company; or

(e) any co-operative society; or

(f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or

(g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or

(h) any trust; or

(i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or

(j) any Government of a foreign State or a foreign enterprise or any association or body established outside India; or

(k) any firm; or

(l) any person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, if such person,-

(A) does not fall under any of the preceding sub-clauses; and

(B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor;

(ii) "goods carriage" shall have the meaning assigned to it in the Explanation to sub-section (7) of section 44AE;

(iii) "contract" shall include sub-contract;

(iv) "work" shall include-

(a) advertising;

(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

(d) catering;

(e) manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.]

9. Subs. by Act 33 of 2009, s. 61, for section 194C (w.e.f. 1-10-2009).

1. Subs. by Act 14 of 2010, s. 37, for "twenty thousand rupees" (w.e.f. 1-7-2010).

2. Subs. by Act 28 of 2016, s. 74, for "seventy-five thousand rupees" (w.e.f. 1-6-2016). Earlier the quoted words were substituted for "fifty thousand rupees" (w.e.f. 1-7-2010).

3. Subs. by Act 20 of 2015, s. 44, for "on furnishing of" (w.e.f. 1-6-2015).

¹[194D. Insurance commission.-

Any person responsible for paying to a resident any income by way of remuneration or reward, whether by way of commission or otherwise, for soliciting or procuring insurance business (including business relating to the continuance, renewal or revival of policies of insurance) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct incometax thereon at the rates in force:

Provided that no deduction shall be made under this section from any such income credited or paid before the 1st day of June, 1973:]

²[Provided further that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed ³[fifteen thousand rupees].]

1. Ins. by Act 21 of 1973, s. 17 (w.e.f. 1-4-1973).

2. Ins. by Act 11 of 1987, s. 48 (w.e.f. 1-6-1987).

3. Subs. by Act 28 of 2016, s. 75, for "twenty thousand rupees" (w.e.f. 1-6-2016). Earlier the quoted words were substituted

by Act 14 of 2010, s. 38, for "five thousand rupees" (w.e.f. 1-7-2010).

⁴[194DA. Payment in respect of life insurance policy.-

Any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy, other than the amount not includible in the total income under clause (10D) of section 10, shall, at the time of payment thereof, deduct income-tax thereon at the rate of ⁵[one per cent.]:

Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than one hundred thousand rupees.]

4. Ins. by Act 25 of 2014, s. 57 (w.e.f. 1-10-2014).

5. Subs. by Act 28 of 2016, s. 76, for "two per cent." (w.e.f. 1-6-2016).

¹[194E. Payments to non-resident sportsmen or sports associations.-

Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) ²[or an entertainer] who is not a citizen of India or a non-resident sports association or institution, 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 in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ³[twenty per cent.].]

1. Ins. by Act 36 of 1989, s. 22 (w.e.f. 1-11-1989). Earlier section 194D was omitted by Act 3 of 1989, s. 31(w.e.f. 1-4-1988) which was inserted by Act 4 of 1988, s. 74 (w.e.f. 1-4-1988).

2. Ins. by Act 23 of 2012, s. 73 (w.e.f. 1-7-2012).

3. Subs. by s. 73, ibid., for "ten per cent." (w.e.f. 1-7-2012).

⁴[194EE. Payments in respect of deposits under National Savings Scheme, etc.-

The person responsible for paying to any person any amount referred to in clause (a) of sub-section (2) of section 80CCA shall, at the time of payment thereof, deduct income-tax thereon at the rate of ⁵[ten per cent.]:

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than two thousand five hundred rupees : Provided further that nothing contained in this section shall apply to the payment of the said amount to the heirs of the assessee.]

4. Ins. by Act 49 of 1991, s. 54 (w.e.f. 1-10-1991).

5. Subs. by Act 28 of 2016, s. 77, for "twenty per cent." (w.e.f. 1-6-2016).

⁶[194F. Payments on account of repurchase of units by Mutual Fund or Unit Trust of India.-

The person responsible for paying to any person any amount referred to in sub-section (2) of section 80CCB shall, at the time of payment thereof, deduct income-tax thereon at the rate of twenty per cent.]

6. Ins. by Act 12 of 1990, s. 40 (w.e.f. 1-4-1991).

⁷[194G. Commission, etc., on the sale of lottery tickets.-

⁸[(1)] Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize (by whatever name called) on such tickets in an amount exceeding⁹[fifteen thousand rupees] shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ¹⁰[five per cent.].]

11*

Explanation.-For the purposes of this section, where any income is credited to any account, whether called "Suspense Account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

7. Ins. by Act 49 of 1991, s. 55 (w.e.f. 1-10-1991).

8. Section 73 renumbered as sub-section (1) thereof by Act 18 of 1992, s. 73 (w.e.f. 1-6-1992).

9. Subs. by Act 28 of 2016, s. 78, for "one thousand rupees" (w.e.f. 1-6-2016).

10. Subs. by s. 78, ibid., for "ten per cent." (w.e.f. 1-6-2016).

11. Sub-sections (2) and (3) omitted by Act 32 of 2003, s. 76 (w.e.f. 1-6-2003). Earlier sub-sections (2) and (3) were inserted by Act 18 of 1992, s. 73 (w.e.f. 1-6-1992).

¹[194H. Commission or brokerage.-

Any person, not being an individual or a Hindu undivided family, who is responsible for paying, on or after the 1st day of June, 2001, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ²[five per cent.]:

Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed ³[fifteen thousand rupees]:

⁴[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section:]

⁵[Provided also that no deduction shall be made under this section on any commission or brokerage payable by Bharat Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited to their public call office franchisees.]

Explanation.-For the purposes of this section,-

(i) "commission or brokerage" includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;

(ii) the expression "professional services" means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as is notified by the Board for the purposes of section 44AA;

(iii) the expression "securities" shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(iv) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

1. Section 194H reinserted by Act 14 of 2001, s. 71 (w.e.f. 1-6-2001). Earlier section 194H was omitted by Act 27 of 1999, s. 72 (w.e.f. 1-4-2000). Amended by Act 18 of 1992, s. 74 (w.e.f. 1-6-1992) and prior its omission section 194H was inserted by Act 49 of 1991, s. 55 (w.e.f. 1-10-1991).

2. Subs. by Act 28 of 2016, s. 79, for "ten per cent." (w.e.f. 1-6-2016).

3. Subs. by s. 79, ibid., for "five thousand rupees" (w.e.f. 1-6-2016).

4. Ins. by Act 20 of 2002, s. 76 (w.e.f. 1-6-2002).

5. Ins. by Act 22 of 2007, s. 55 (w.e.f. 1-6-2007).

¹[194-I. Rent.-

²[Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, ³[deduct income-tax thereon at the rate of-

⁴[(a) two per cent. for the use of any machinery or plant or equipment; and

(b) ten per cent. for the use of any land or building (including factory building) or land appurtenant to a building (including factory building) or furniture or fittings:]]

Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed ⁵[two hundred and forty thousand rupees]:

⁶[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section:]

⁷[Provided also that no deduction shall be made under this section where the income by way of rent is credited or paid to a business trust, being a real estate investment trust, in respect of any real estate asset, referred to in clause (23FCA) of section 10, owned directly by such business trust.]

Explanation.-For the purposes of this section,-

⁸[(i) "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,-

(a) land; or

(b) building (including factory building); or

(d) machinery; or

(e) plant; or

(f) equipment; or

(g) furniture; or

(h) fittings, whether or not any or all of the above are owned by the payee;]

(ii) where any income is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.]

1. Ins. by Act 32 of 1994, s. 40 (w.e.f. 1-6-1994).

2. Subs. by Act 32 of 2003, s. 77, for certain words (w.e.f. 1-6-2003).

3. Subs. by Act 22 of 1995, s. 35, for "deduct income-tax thereon at the rate of twenty per cent." (w.e.f. 1-7-1995).

4. Subs. by Act 33 of 2009, s. 62, for clauses (a), (b) and (c) (w.e.f. 1-10-2009).

5. Subs. by Act 7 of 2019, s. 10, for "one hundred eighty thousand rupees" (w.e.f. 1-4-2019). Earlier it was substituted by Act 14 of 2010, s. 40, for "one hundred and twenty thousand rupees" (w.e.f. 1-7-2010).

6. Ins. by Act 20 of 2002, s. 77 (w.e.f. 1-6-2002).

7. Ins. by Act 20 of 2015, s. 45 (w.e.f. 1-6-2015).

8. Subs. by Act 29 of 2006, s. 15, for clause (i) (w.e.f. 13-7-2006).

¹[194-IA. Payment on transfer of certain immovable property other than agricultural land-

(1) Any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one per cent. of such sum as income-tax thereon.

(2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

Explanation.-For the purposes of this section,-

(a) "agricultural land" means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(b) "immovable property" means any land (other than agricultural land) or any building or part of a building.]

1. Ins. by Act 17 of 2013, s. 46 (w.e.f. 1-6-2013).

²[194-IB. Payment of rent by certain individuals or Hindu undivided family.-

(1) Any person, being an individual or a Hindu undivided family (other than those referred to in the second proviso to section 194-I), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of a month during the previous year, shall deduct an amount equal to five per cent. of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

Explanation.-For the purposes of this section, "rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building or both.]

2. Ins. by Act 7 of 2017, s. 64 (w.e.f. 1-6-2017).

³[194-IC. Payment under specified agreement.-

Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent. of such sum as income-tax thereon.]

3. Ins. by s. 65, ibid. (w.e.f. 1-4-2017).

¹[194J. Fees for professional or technical services.-

(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of-

(a) fees for professional services, or

(b) fees for technical services, ²[or]

³[(ba) any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, to a director of a company, or]

²[(c) royalty, or

(d) any sum referred to in clause (va) of section 28,] shall, at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ⁴[ten per cent.] of such sum as income-tax on income comprised therein:

Provided that no deduction shall be made under this section-

(A) from any sums as aforesaid credited or paid before the 1st day of July, 1995; or

(B) where the amount of such sum or, as the case may be, the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed-

(i) ⁵[thirty thousand rupees], in the case of fees for professional services referred to in clause (a), or

(ii) ⁵[thirty thousand rupees], in the case of fees for technical services referred to in⁶[clause (b), or]

²[(iii) ⁵[thirty thousand rupees], in the case of royalty referred to in clause (c), or

(iv) ⁵[thirty thousand rupees], in the case of sum referred to in clause (d):]

⁷[Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum by way of fees for professional services or technical services is credited or paid, shall be liable to deduct income-tax under this section:]

¹[Provided also that no individual or a Hindu undivided family referred to in the second proviso shall be liable to deduct income-tax on the sum by way of fees for professional services incase such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family:]

²[Provided also that the provisions of this section shall have effect, as if for the words "ten per cent.", the words "two per cent." had been substituted in the case of a payee, engaged only in the business of operation of call centre.]

Explanation.-For the purposes of this section,-

(a) "professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;

(b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

⁴[(ba) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;]

(c) where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such sum, such crediting shall be deemed to be credit of such sum to the account of the payee and the provisions of this section shall apply accordingly.

194K. [Income in respect of units.]-Omitted by the Finance Act, 2016 (28 of 2016), s. 80 (w.e.f. 1-6-2016).

194L. [Payment of compensation on acquisition of capital asset.]-Omitted by s. 80, ibid. (w.e.f. 1-6-2016).

1. Ins. by Act 22 of 1995, s. 36 (w.e.f. 1-7-1995).

2. Ins. by Act 29 of 2006, s. 16 (w.e.f. 13-7-2006).

3. Ins. by Act 23 of 2012, s. 74 (w.e.f. 1-7-2012).

4. Subs. by Act 22 of 2007, s. 57, for "five per cent." (w.e.f. 1-6-2007).

5. Subs. by Act 14 of 2010, s. 41, for "twenty thousand rupees" (w.e.f. 1-7-2010).

6. Subs. by Act 29 of 2006, s. 16,for "clause (b):" (w.e.f. 13-7-2006).

7. Ins. by Act 20 of 2002, s. 78 (w.e.f. 1-6-2002).

1. Ins. by Act 32 of 2003, s. 78 (w.e.f. 1-6-2003).

2. Ins. by Act 7 of 2017, s. 66 (w.e.f. 1-6-2017).

3. Subs-section (2) and (3) omitted by Act 32 of 2003, s. 78 (w.e.f. 1-6-2003).

4. Ins. by Act 29 of 2006, s. 16 (w.e.f. 13-7-2006).

⁵[194LA. Payment of compensation on acquisition of certain immovable property.-

Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon:

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed ¹[two lakh and fifty thousand rupees]:

²[Provided further that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (30 of 2013).]

Explanation.-For the purposes of this section,-

(i) "agricultural land" means agricultural land in India including land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(ii) "immovable property" means any land (other than agricultural land) or any building or part of a building.]

5. Ins. by Act 23 of 2004, s. 38 (w.e.f. 1-10-2004).

1. Subs. by Act 28 of 2016, s. 81, for "two hundred thousand rupees" (w.e.f. 1-6-2016).

2. Ins. by Act 7 of 2017, s. 67 (w.e.f. 1-4-2017).

³[194LB. Income by way of interest from infrastructure debt fund.-

Where any income by way of interest is payable to a non-resident, not being a company, or to a foreign company, by an infrastructure debt fund referred to in clause (47) of section 10, 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 in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct incometax thereon at the rate of five per cent.]

3. Ins. by Act 8 of 2011, s. 28 (w.e.f. 1-6-2011).

⁴[194LBA.Certain income from units of a business trust.-

(1) Where any distributed income referred to in section 115UA, being of the nature referred to ⁵[in sub-clause (a) of clause (23FC)] ⁶[or clause (23FCA)] of section 10, is payable by a business trust to its unit holder being a resident, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.

(2) Where any distributed income referred to in section 115UA, being of the nature referred to ⁵[in sub-clause (a) of clause (23FC)] of section 10, is payable by a business trust to its unit holder,⁷[being a non-resident (not being a company)] or a foreign company, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.]

⁶[(3) Where anydistributed income referred to in section 115UA, being of the nature referred to in clause (23FCA) of section 10, is payable by a business trust to its unit holder, being a non-resident (not being a company), or a foreign company, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.]

4. Ins. by Act 25 of 2014, s. 58 (w.e.f. 1-10-2014).

5. Subs. by Act 28 of 2016, s. 82, for "in clause (23FC)" (w.e.f. 1-6-2016).

6. Ins. by Act 20 of 2015, s. 46 (w.e.f. 1-6-2015).

7. Subs. by s. 46, ibid., for "being a non-resident, not being a company" (w.e.f. 1-6-2015).

¹[194LBB. Income in respect of units of investment fund.-

Where any income, other than that proportion of income which is of the same nature as income referred to in clause (23FBB) of section 10, is payable to a unit holder in respect of units of an investment fund specified in clause (a) of the Explanation 1 to section 115UB, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier,²[deduct income-tax thereon,-

(i) at the rate of ten per cent, where the payee is a resident;

(ii) at the rates in force, where the payee is a non-resident (not being a company) or a foreign company:

Provided that where the payee is a non-resident (not being a company) or a foreign company, no deduction shall be made in respect of any income that is not chargeable to tax under the provisions of the Act.]

Explanation.-For the purposes of this section,-

(a) "unit" shall have the meaning assigned to it in clause (c) of the Explanation 1 to section 115UB;

(b) where any income as aforesaid is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly.]

1. Ins. by Act 20 of 2015, s. 47 (w.e.f. 1-6-2015).

2. Subs. by Act 28 of 2016, s. 83, for "deduct income-tax thereon at the rate of ten per cent." (w.e.f. 1-6-2016).

³[194LBC.Income in respect of investment in securitization trust.-

(1) Where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation occurring after section 115TCA, 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 in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rate of-

(i) twenty-five per cent., if the payee is an individual or a Hindu undivided family;

(ii) thirty per cent., if the payee is any other person.

(2) Where any income is payable to an investor, being a non-resident (not being a company) or a foreign company, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation occurring after section 115TCA, 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 in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rates in force.

Explanation.-For the purposes of this section,-

(a) "investor" shall have the meaning assigned to it in clause (a) of the Explanation occurring after section 115TCA;

3. Ins. by s. 84, ibid (w.e.f. 1-6-2016).

¹[194LC. Income by way of interest from Indian company.-

(1) Where any income by way of interest referred to in sub-section (2) is payable to a non-resident, not being a company or to a foreign company by a specified company ²[or a business trust], 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 in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct the income-tax thereon at the rate of five per cent.

(2) The interest referred to in sub-section (1) shall be the income by way of interest payable by the specified company ²[or the business trust],-

³[(i) in respect of monies borrowed by it in foreign currency from a source outside India,-

(a) under a loan agreement at any time on or after the 1st day of July, 2012 but before the ⁴[1st day of July,2020]; or

(b) by way of issue of long-term infrastructure bonds at any time on or after the 1st day of July, 2012 but before the 1st day of October, 2014; or

(c) by way of issue of any long-term bond including long-term infrastructure bond at any time on or after the 1st day of October, 2014 but before the ⁴[1st day of July, 2020], as approved by the Central Government in this behalf;⁵[or]

⁶[(ia) in respect of monies borrowed by it from a source outside India by way of issue of rupee denominated bond before the 1st day of July, 2020, and]

(ii) to the extent to which such interest does not exceed the amount of interest calculated at the rate approved by the Central Government in this behalf, having regard to the terms of the loan or the bond and its repayment.

Explanation.-For the purpose of this section-

(a) "foreign currency" shall have the meaning assigned to it in clause (m) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(b) "specified company" means an Indian company.]

1. Ins. by Act 23 of 2012, s. 76 (w.e.f. 1-7-2012).

2. Ins. by Act 25 of 2014, s. 59 (w.e.f. 1-10-2014).

3. Subs. by s. 59, ibid., for clause (i) (w.e.f. 1-10-2014).

4. Subs. by Act 7 of 2017, s. 68, for "1st day of July, 2017" (w.e.f. 1-4-2018).

5. Subs. by s. 68, ibid., for "and" (w.e.f. 1-4-2018).

6. Ins. by s. 68, ibid (w.e.f. 1-4-2016).

¹[194LD. Income by way of interest on certain bonds and Government securities.-

(1) Any person who is responsible for paying to a person being a Foreign Institutional Investor or a Qualified Foreign Investor, any income by way of interest referred to in sub-section (2), shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.

(2) The income by way of interest referred to in sub-section (1) shall be the interest payable on or after the 1st day of June, 2013 but before the ²[1st day of July, 2020] in respect of investment made by the payee in-

(i) a rupee denominated bond of an Indian company ; or

(ii) a Government security: Provided that the rate of interest in respect of bond referred to in clause (i) shall not exceed the rate as may be notified by the Central Government in this behalf.

Explanation.-For the purpose of this section,-

(a)"Foreign Institutional Investor" shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD;

(b)"Government security" shall have the meaning assigned to it in clause (b) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(c)"Qualified Foreign Investor" shall have the meaning assigned to it in the Circular No. Cir/IMD/DF/14/2011, dated the 9th August, 2011, as amended from time to time, issued by the Securities and Exchange Board of India, under section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992).]

1. Ins. by Act 17 of 2013, s. 47 (w.e.f. 1-6-2013).

2. Subs. by Act 7 of 2017, s. 69, for "1st day of July, 2017" (w.e.f. 1-4-2018).

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