Who is the taxpayer

Payer of Interest on Securities

Who is the recipient

A resident person holding securities

Payment covered

Interest on Securities

At what time tax has to be deducted at source

At the time of payment or at the time of credit, whichever is earlier.

Maximum amount which can be paid without Tax Deduction

-

Rate of tax deducted at source

- 10% in the case of listed debentures and - - 20% in he case of non-listed debentures, if the recipient is resident non-corporate assessee.
- 20% if the recipient is a domestic company ( these rates are subject to surcharge, education cess and secondary and higher education cess)

When the provisions are not applicable

Interest on Central / State Government Securities and few more are there…

FY-2008-2009

1.

if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax deduction does not exceed Rs.10 lakh.

NIL

2.

if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax deduction exceed Rs.10 lakh.

10%

3.

if the recipient is an Artifitial Judicial Person

10%

4.

if the recipient is Firm or a Domestic Company and payment or credit subject to tax deduction does not exceed Rs.1 Crore.

NIL

5.

if the recipient is Firm or a Domestic Company and payment or credit subject to tax deduction exceed Rs.1 Crore.

10%

6.

if the recipient is a Non-Domestic Company and payment or credit subject to tax deduction does not exceed Rs.1 Crore.

NIL

7.

if the recipient is a Non-Domestic Company and payment or credit subject to tax deduction exceed Rs.1 Crore.

2.5 %

8.

if the recipient is a Co-operative Soceity or Local Authority.

NIL

Ø

Education Cess ( as percentage of Income Tax and surcharge)

2%

Ø

Secondary and Higher Education Cess (as a percentage of income tax and surcharge)

1%