Section 194A provides for deduction of tax @10% by any person (other than an individual or a HUF whose total sales, gross receipts or turnover from the business or profession carried on by him/it does not exceed 1 crore in case of business and 50 lakhs in case of profession during the immediately preceding financial year) on interest, other than “interest on securities” credited or paid to residents.
No deduction of tax under section 194A would be made, inter alia, if the aggregate amount of interest paid or credited by post office during the financial year does not exceed 40,000/ 50,000 (in case of a senior citizen), on any deposit made with it under any scheme framed and notified by the Central Government.
Accordingly, the Central Government has, vide this notification, specified the Scheme “Mahila Samman Savings Certificate, 2023”. “Mahila Samman Savings Certificate, 2023” is a one-time scheme available for two years i.e., from 1st April, 2023 to 31st March, 2025. It offers a maximum deposit facility of upto Rs.2 lakh in the name of women or a girl for 2 years at a fixed interest rate of 7.5% p.a., compounded quarterly.
Consequently, no tax under section 194A would be deductible by the post boffice on interest paid or credited under this scheme since the amount of interest would not exceed Rs.40,000.
TDS on Leasing an Aircraft
Section 194 requires deducting tax at source @10% by the principal officer of a domestic company on dividend distributed or paid by it to its resident shareholders.
As per section 197A(1F), no deduction of tax would be made or deduction of tax would be made at such lower rate, from such payment to such person or class of persons, including institution, association or body or class of institutions or associations or bodies notified by the Central Government in this behalf.
In exercise of the power provided under section 197A(1F), the Central Government has, vide this notification, notified that w.e.f. 1st September, 2023, no tax is required to be deducted under section 194 from dividend paid by any unit of an IFSC, primarily engaged in the business of leasing of an aircraft (payer) to a company, being a Unit of an IFSC primarily engaged in the business of leasing of an aircraft (payee) subject to the following:
- The payee has to furnish and verified a statement-cum-declaration to the payer giving details of previous year relevant to the assessment year in which the dividend income eligible for exemption under section 10(34B) is payable.
- The payer would not deduct tax on payment made or credited to the recipient of such dividend (payee) after the date of receipt of copy of statement-cum-declaration from payee and furnish the particulars of all the payments made to the recipient of such dividend on which tax has not been deducted in the statement of deduction of tax under section 200(3) read with the Rule 31A.