Tds on interest paid on debentures issued to banks

Public company has issued debentures to Banks. Is Interest on debentures payable to banks applicable for TDS deduction u/s 193 ?

Note: These debentures are not listed on stock exchange

Replies (1)

Hi Dinesh!

According to section 193(iib), no TDS is required to be deducted is the debentures are issued by a public sector company.

193. The person responsible for paying to a resident any income 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 at the rates in force on the amount of the interest payable :

Provided that no tax shall be deducted from—

(iib)  any interest payable on such debentures, issued by any institution or authority, or any public sector company, or any co-operative society (including a co-operative land mortgage bank or a co-operative land development bank), as the Central Government may, by notification in the Official Gazette, specify in this behalf;

Therefore, in your case, the company may not deduct TDS.

Hope it helps! :)

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