The provisions relating to TDS on interest on securities have been restructured under the Income-tax Act, 2025. The earlier Section 193 of the Income-tax Act, 1961 is now covered under Section 393(1) [Table: Sl. No. 5(i)], effective from 1st April, 2026.
This restructuring introduces a tabular classification while continuing the provisions relating to deduction of tax at source on interest income arising from securities.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(1)
- Table Reference: Table: Sl. No. 5(i)
- Nature of Payment: Income by way of interest on securities
- Earlier Section (IT Act 1961): Section 193
- Return Form: 26Q
- Code (for return filing): 1019
Applicability of TDS on Interest on Securities
TDS is required to be deducted on interest income arising from securities where such income is payable to a resident. The responsibility to deduct tax lies with the person making such payment.
Time of Deduction
TDS shall be deducted at the earlier of the following events:
- At the time of credit of interest to the account of the payee
- At the time of payment by cash, cheque, draft or any other mode
Rate of TDS
- 10% on interest on securities
- Higher rate applicable if PAN is not furnished
Threshold Limit
TDS shall not be deducted where the amount of interest does not exceed the prescribed limit.
- Interest up to ₹10,000 is not subject to TDS
Scope of Interest on Securities
Interest on securities includes income arising from various types of securities issued by government bodies and other entities. This includes:
- Interest on Central or State Government securities
- Interest on debentures
- Interest on securities issued by local authorities
- Interest on securities issued by companies or statutory corporations
Cases Where TDS is Not Required
TDS shall not be deducted in specific cases where the nature of payment or the recipient qualifies for exemption. These include:
- Interest payable to insurance companies
- Interest paid by widely held companies (subject to conditions)
- Interest on dematerialised securities listed on stock exchanges
- Interest on Government securities
- Interest on 8% Savings Bonds (subject to threshold)
- Declaration under Form 15G / 15H furnished
- Payments to New Pension System Trust
- Payments to notified institutions or bodies
- Income exempt under Section 10
- Certain payments to securitisation trusts
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