Instructions for deduction of tax at source from interest on securities during the financial year 1971-72 at the rates speci­fied in Part III of First Schedule to Finance (No. 2) Bill, 1971

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....hich income-tax and surcharge should be deducted from interest on Government securities after May 28, 1971. It is requested that a circular on the basis of this draft may be issued by you immedi­ately to all Treasury Officers and Sub-Treasury Officers under your control, individually. Circular : No. 59 [F. No. 275/37/71-ITJ], dated 3-6-1971. DRAFT CIRCULAR REFERRED TO IN INSTRUCTIONS 1. I am to invite your attention to this Office Letter........regarding deduction of income-tax and surcharge from interest on Government securities during the financial year 1970-71. 2. According to the Finance (No. 2) Bill, 1971, income-tax is to be deducted from the entire amount of interest on securities at the following rates namely : &n....

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....nbsp;  company  is  not  a  domestic company—       (a) on   interest   payable  on  a   tax-free security 44 per cent Nil   (b) on interest on other securities 70 per cent Nil 3. The term "domestic company" for the present purposes, means an Indian company or any other company which, in respect of its income liable to income-tax under the Act, has made the pre­scribed arrangements for the declaration and payment within India, of the dividends (including dividends on preference shares) payable out of such income in accordance with the provi­sions of section 194. 4. In making payment or crediting interest on Gove....

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.... as the case may be, the 7 per cent Gold Bonds, 1980 held by him (including such Bonds, if any, held on his behalf by any other person) did not in either case exceed Rs. 10,000 at any time during the period to which the interest relates. (5) No tax should be deducted from interest payable to a non-resident on 4¼ per cent National Defence Loans, 1968 and 4¾ per cent National Defence Loans, 1972 as the interest paid on these loans to non-residents is totally exempt from income-tax under Notification No. SO 3331, issued under section 10(4). In the case of residents receiving interest on these loans, deduc­tion of tax has to be made at the prescribed rates, except when the recipient is an individual. (6) No tax should be deducted fr....