Amended and updated notes on section 196 of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations.
Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 196 of IT Act 1961 provides for Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations.
Recently, we have discussed in detail section 195A (Income payable “net of tax”) of IT Act 1961. Today, we learn the provisions of section 196 of Income-tax Act 1961. The amended provision of section 196 is effective for financial year 2022-23 relevant to the assessment year 2023-24.
In this article, you will learn detail of the provisions of section 196 of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.
Section-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.