law: The Income-Tax Act, 1961
  5[196. Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations.-
  Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to-
  (i) the Government, or
  (ii) the Reserve Bank of India, or
  (iii) a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, or
  (iv) a Mutual Fund specified under clause (23D) of section 10, where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.]
  5. Subs. by Act 4 of 1988, s. 75, for section 196 (w.e.f. 1-4-1988). Earlier section 196 was substituted by Act 20 of 1967, s. 30 (w.e.f. 1-4-1967).
  6[196A. Income in respect of units of non-residents.-
  (1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India 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 rate of twenty per cent:
  1[Provided that no deduction shall be made under this section from any such income credited or paid on or after the 1st day of April, 2003.]
  (2) Notwithstanding anything contained in sub-section (1), no deduction of tax shall be made from any income payable in respect of units of the Unit Trust of India to a non-resident Indian or a non-resident Hindu undivided family, where the units have been acquired from the Unit Trust of India out of the funds in a Non-resident (External) Account maintained with any bank in India or by remittance of funds in foreign currency, in accordance, in either case, with the provisions of 2[the Foreign Exchange Management Act, 1999 (42 of 1999)], and the rules made thereunder.
  Explanation.-For the purposes of this section-
  (a) "foreign currency" shall have the meaning assigned to it in 2[the Foreign Exchange Management Act, 1999 (42 of 1999)];
  (b) "non-resident Indian" shall have the meaning assigned to it in clause (e) of section 115C;
  (c) "Unit Trust of India" means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963);
  (d) where any income as aforesaid is credited to any account, whether called "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.]
  6. Subs. by Act 22 of 1995, s. 37, for section 196A (w.e.f. 1-7-1995).
  1. Ins. by Act 32 of 2003, s. 81 (w.e.f. 1-4-2003). Earlier the proviso omitted by Act 20 of 2002, s. 82 (w.e.f.1-6-2002) which was inserted by Act 27 of 1999, s. 75 (w.e.f.1-6-1999).
  2. Subs. by Act 17 of 2013, s. 4, for "the Foreign Exchange Regulation Act, 1973 (46 of 1973)" (w.e.f. 1-4-2013).
  3[196B. Income from units.-
  4[Where any income in respect of units referred to in section 115AB or by way of long-term capital gains arising from the transfer of such units is payable to an Offshore Fund], the person responsible for making the payment 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 rate of ten per cent.]
  3. Ins. by Act 49 of 1991, s. 58 (w.e.f. 1-10-1991).
  4. Subs. by Act 38 of 1993, s. 26, for "Where any income is payable in respect of units referred to in section 115AB to an Offshore Fund" (w.e.f. 1-6-1993).
  5[196C. Income from foreign currency bonds or shares of Indian company.-
  6[Where any income by way of interest or dividends in respect of 7[bonds or Global Depository Receipts] referred to in section 115AC or by way of long-term capital gains arising from the transfer of such 7[bonds or Global Depository Receipts] is payable to a non-resident], the person responsible for making the payment 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 rate of ten per cent.]:
  8[Provided that no such deduction shall be made in respect of any dividends referred to in section 115-O.]
  5. Ins. by Act 18 of 1992, s. 75 (w.e.f. 1-6-1992).
  6. Subs. by Act 38 of 1993, s. 27, for "Where any income by way of interest or dividends is payable in respect of bonds or shares referred to in section 115AC to a non-resident" (w.e.f. 1-6-1993).
  7. Subs. by Act 14 of 2001, s. 72, for "bonds or shares" (w.e.f. 1-4-2002).
  8. Ins. by Act 32 of 2003, s. 82 (w.e.f. 1-4-2003). Earlier the proviso was omitted by Act 20 of 2002, s. 83 (w.e.f. 1-6-2002) which was inserted by Act 26 of 1997, s. 50 (w.e.f. 1-6-1997).
  1[196D. Income of Foreign Institutional Investors from securities.-
  (1) Where 2[any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD, not being income by way of interest referred to in section 194LD, is payable] to a Foreign Institutional Investor, the person responsible for making the payment 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 rate of twenty per cent.:
  3[Provided that no such deduction shall be made in respect of any dividends referred to in section 115-O.]
  (2) No deduction of tax shall be made from any income, by way of capital gains arising from the transfer of securities referred to in section 115AD, payable to a Foreign Institutional Investor.]
  1. Ins. by Act 38 of 1993, s. 28 (w.e.f. 1-6-1993).
  2. Subs. by Act 17 of 2013, s. 49, for "any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD is payable" (w.e.f. 1-6-2013).
  3. Ins. by Act 32 of 2003, s. 83 (w.e.f. 1-4-2003). Earlier the proviso was omitted by Act 20 of 2002, s. 84 (w.e.f. 1-6-2002) which was inserted by Act 26 of 1997, s. 50 (w.e.f. 1-6-1997).