69[Interest other than "Interest on securities".
194A. 70(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income 71[by way of interest on securities], 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 issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force:
Provided that no such deduction shall be made in a case where the person (not being a company or a registered firm) entitled to receive such income furnishes to the person responsible for making the payment—
(a) an affidavit, or
(b) a statement in writing,
declaring that his estimated total income assessable for the assessment year next following the financial year in which the income is credited or paid will be less than the minimum liable to income-tax.
72[Explanation : For the purposes of this section, where any income by way of interest 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.]
73(2) The statement in writing referred to in sub-section (1) shall also contain such other particulars as may be prescribed, be verified in the prescribed manner, 74[be signed in the presence of—
(a) a Member of Parliament or a State Legislature; or
(b) a Member of a District Council or a Metropolitan Council, a Municipal Corporation or Municipal Committee; or
(c) a Gazetted Officer of the Central or a State Government; or
(d) an officer of any banking company (including a co-operative bank) of the rank of sub-agent, agent or manager,
and bear an attestation by such member or officer to the effect that the person who has signed the statement is known to him.]
(3) The provisions of sub-section (1) shall not apply—
75[(i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person referred to in sub-section (1) to the account of, or to, the payee, does not exceed 76[two thousand five hundred rupees;]
(ii) to such income credited or paid before the 1st day of October, 1967;
(iii) to such income credited or paid to—
(a) any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies, or any co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank), or
(b) any financial corporation established by or under a Central, State or Provincial Act, or
(c) the Life Insurance Corporation of India established under the Life Insurance Corporation Act, 1956 (31 of 1956), or
(d) the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963), or
(e) any company or co-operative society carrying on the business of insurance, or
77(f) such other institution, association or body 78[or class of institutions, associations or bodies] which the Central Government may, for reasons to be recorded in writing, notify in this behalf notify in this behalf in the Official Gazette;
(iv) 79[to such income credited or paid by a firm to a partner of the firm];
(v) to such income credited or paid by a co-operative society 80[to a member thereof or] to any other co-operative society;]
81[(vi) to such income credited or paid in respect of deposits under any 82scheme framed by the Central Government and notified by it in this behalf in the Official Gazette;
(vii) to such income credited or paid in respect of deposits with a banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or with a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank);]
83[(viii) to such income credited or paid by the Central Government under any provision of this Act or the Indian Income-tax Act, 1922 (11 of 1922), or the Estate Duty Act, 1953 (34 of 1953), or the Wealth-tax Act, 1957 (27 of 1957), or the Gift-tax Act, 1958 (18 of 1958), or the Super Profits Tax Act, 1963 (14 of 1963), or the Companies (Profits) Surtax Act, 1964 (7 of 1964), or the Interest-tax Act, 1974 (45 of 1974).]
83[(4) The person responsible for making the payment referred to in sub-section (1) may, at the time of making any deduction, increase or reduce the amount to be deducted under this section for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the financial year.]
Explanation : In this section, "Gazetted Officer" includes a Tehsildar or a Mamlatdar of a Taluka or Tehsil or any other officer performing functions similar to those of a Tehsildar or Mamlatdar.]
69. Inserted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1967.
70. See rule 37(2A) and Form No. 26A.
71. Substituted for 'chargeable under the head "Interest on securities"', by the Finance Act, 1988, w.e.f. 1-4-1989.
72. Inserted by the Finance Act, 1987, w.e.f. 1-6-1987.
73. See rule 29A and Form No. 15A.
74. Substituted for "be signed in the presence of a Gazetted Officer of the Central or a State Government and bear an attestation by such officer to the effect that the person who has signed the statement is known to him" by the Finance Act, 1968, w.e.f. 1-4-1968.
75. Substituted by the Finance Act, 1975, w.e.f. 1-4-1975. Section 20 (2) of the Finance Act, 1975 makes an independent provision relating to substitution of clause (i). Sub-section (2) read as under:
'(2) Notwithstanding the substitution of clause (i) of sub-section (3) of section 194A of the Income-tax Act by sub-section (1) of this section nothing in section 201 or section 276B of that Act shall apply to, or in relation to, any failure to deduct income-tax under sub-section (1) of the said section 194A on any income by way of interest other than income chargeable under the head "Interest on securities" credited or paid on or after the 1st day of April, 1975, but before the 1st day of June, 1975, where the income so credited or paid at any one time does not exceed four hundred rupees.'
76. Substituted for "one thousand rupees" by the Finance Act, 1987, w.e.f. 1-6-1987.
77. For complete list of notified institutions, refer Taxmann's Direct Taxes Circulars, Vol. 2 1988 edn., p. 1516.
78. Inserted by the Finance Act, 1968, w.e.f. 1-4-1968.
79. Reintroduced by the Direct Tax Laws (Amendment) Act, 1989, with retrospective effect from 1-4-1988. Earlier, it was omitted by the Direct Tax Laws (Amendment) Act, 1987, with effect from the same date. Original clause (iv) was inserted by the Finance Act, 1968, w.e.f. 1-4-1968.
80. Inserted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1971.
81. Inserted by the Finance Act, 1970, w.e.f. 1-4-1970.
82. For notified schemes, refer Taxmann's Direct Taxes Circulars, Vol. 2, 1988 edn., p. 1519. Income-tax Rules, 1989 edn.
83. Inserted by the Finance Act, 1975, w.e.f. 1-4-1975.
[As amended by the Finance Act, 1989 and the Direct Tax Laws (Amendment) Act, 1989]