Union Budget 2023-24 + FINANCE Bill, 2023

Removal of exemption from TDS on payment of interest on listed debentures to a resident

Section 193 of the Act provides for TDS on payment of any income to a resident by way of interest on securities.

2. The proviso to section 193 of the Act provides exemption from TDS in respect of payment of interest on certain securities. Clause (ix) of the proviso to the aforesaid section provides that no tax is to be deducted in the case of any interest payable on any security issued by a company, where such security is in dematerialized form and is listed on a recognized stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 (32 of 1956) and the rules made thereunder.

3. It is seen that there is under reporting of interest income by the recipient due to above TDS exemption. Hence, it is proposed to omit clause (ix) of the proviso to section 193 of the Act.

4. This amendment will take effect from 1st April, 2023.

[clause 81]

 

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Full Text:

Union Budget 2023-24 + FINANCE Bill, 2023

TDS exemption removal on interest requires withholding for payments on listed dematerialized debentures to resident holders. The Finance Bill proposes deletion of the proviso clause that exempted TDS on interest paid to resident holders of listed dematerialized debentures, thereby requiring tax deduction at source on interest payments to such resident holders; the amendment addresses under-reporting of interest income and takes effect from 1 April, 2023.