195 Income Tax Act - Other sums

Section 195 of Income Tax Act 1961 - Other sums

1 (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, 2 any interest (not being interest referred to in section 194LB or section 194LC)3 or section 194LD 4 *** or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries" 5 ***) 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, deduct income-tax thereon at the rates in force:

6 Provided that in the case of interest payable by the Government or a public sector bank within the meaning of clause (23D) of section 10 or a public financial institution within the meaning of that clause, deduction of tax shall be made only at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode:

7 Provided further that no such deduction shall be made in respect of any dividends referred to in section 115-O.

Explanation 8 1.-For the purposes of this section, where any interest or other sum 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.

9 Explanation 2.-For the removal of doubts, it is hereby clarified that the obligation to comply with sub-section (1) and to make deduction thereunder applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has-

(i) a residence or place of business or business connection in India; or

(ii) any other presence in any manner whatsoever in India.

(2) Where the person responsible for paying any such sum chargeable under this Act (10 other than salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the 11 Assessing Officer to determine, 12 by general or special order, the appropriate proportion of such sum so chargeable, and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum which is so chargeable.

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14 (3) Subject to rules made under sub-section (5), any person entitled to receive any interest or other sum on which income-tax has to be deducted under sub-section (1) may make an application in the prescribed form to the 11 Assessing Officer for the grant of a certificate authorising him to receive such interest or other sum without deduction of tax under that sub-section, and where any such certificate is granted, every person responsible for paying such interest or other sum to the person to whom such certificate is granted shall, so long as the certificate is in force, make payment of such interest or other sum without deducting tax thereon under sub-section (1).

(4) A certificate granted under sub-section (3) shall remain in force till the expiry of the period specified therein or, if it is cancelled by the 11 Assessing Officer before the expiry of such period, till such cancellation.

(5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (3) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith.

15 (6) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.

16 (7) Notwithstanding anything contained in sub-section (1) and sub-section (2), the Board may, by notification in the Official Gazette, specify a class of persons or cases, where the person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, shall make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of sum chargeable, and upon such determination, tax shall be deducted under sub-section (1) on that proportion of the sum which is so chargeable.
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1. Subs. by Act 11 of 1987, s. 49, for sub-section (1) (w.e.f. 1-6-1987).
2. Subs. by Act 23 of 2012, s. 77, for "any interest" (w.e.f. 1-4-2012). 3. Ins. by Act 17 of 2013, s. 48 (w.e.f. 1-6-2013). 4. The words "(not being interest on securities)" omitted by Act 32 of 2003, s. 80 (w.e.f. 1-6-2003). 5. The words "or dividends" omitted by Act 49 of 1991, s. 56 (w.e.f. 1-10-1991).
6. Ins. by Act 36 of 1989, s. 23 (w.e.f. 1-6-1987).
7. Ins. by Act 32 of 2003, s. 80 (w.e.f. 1-4-2003). Earlier the proviso was omitted by Act 20 of 2002, s. 80 (w.e.f. 1-6-2002) which was inserted by Act 26 of 1997, s. 49 (w.e.f. 1-6-1997).
8. The Explanation renumbered as Explanation 1 thereof by Act 23 of 2012, s. 77 (w.r.e.f. 1-4-1962).
9. Ins. by s. 77, ibid. (w.r.e.f. 1-4-1962).
10. Subs. by Act 32 of 2003, s. 80, for "other than interest on securities and salary" (w.e.f. 1-6-2003). Earlier the words "other than interest including interest on securities" substituted by Act 66 of 1976, s. 22, for "other than interest on securities" (w.e.f. 1-6-1976) and the word "dividend" was omitted by Act 49 of 1991, s. 56 (w.e.f. 1-10-1991).
11. Subs. by Act 4 of 1988, s. 2, for "Income-tax Officer" (w.e.f. 1-4-1988).
12. Subs. by Act 26 of 1988, s. 39, for "in the prescribed manner (w.r.e.f. 1-3-1988). Earlier the quoted words were substituted by Act 11 of 1987, s. 49 for "by general or special order" (w.e.f. 1-6-1987).
13. The proviso omitted by Act 49 of 1991, s. 56 (w.e.f. 1-10-1991). Earlier the proviso was inserted by Act 11 of 1987, s. 49 (w.e.f. 1-6-1987).
14. Ins. by Act 19 of 1970, s. 24 (w.e.f. 1-4-1970).
15. Subs. by Act 20 of 2015, s. 49, for sub-section (6) (w.e.f. 1-6-2015). Earlier sub-section (6) was inserted by Act 18 of 2008, s. 44 (w.e.f. 1-4-2008).
16. Ins. by Act 23 of 2012, s. 77 (w.e.f. 1-7-2012).