Tax deduction at source on dividends: mandatory withholding from dividend payments, with surcharge increasing tax liability. Section 194 mandates tax deduction at source from dividends by principal officers before payment or issuance of cheques or warrants, with an exemption for resident individuals in companies substantially owned by the public where dividends are paid by account payee cheque and aggregate distributions do not exceed a small-amount threshold. An amendment to the Finance Act First Schedule imposes a surcharge on income-tax, increasing tax computed under the Finance Act rates, effective 16 December 1987, and this surcharge is to be included in computing TDS on dividends.