Income Tax Act, 2025
Section 10: Explanation 2 omitted by s. 70, ibid (w.e.f. 11992).
10. Explanation 2 omitted by s. 70, ibid (w.e.f. 11992).
637
194. Dividends.—The principal officer of an Indian company or a company which has made the
prescribed arrangements for the declaration and payment of dividends (including dividends on preference
shares) within India, shall, before making any payment in cash or before issuing any cheque or warrant in
respect of any dividend or before making any distribution or payment to a shareholder, 1[who is resident
in India,] of any dividend within the meaning of sub-clause (a) or sub-clause (b) or sub-clause (c) or
sub-clause (d) or sub-clause (e) of clause (22) of section 2, deduct from the amount of such dividend,
income-tax 2*** at the rates in force:
3[Provided that no such deduction shall be made in the case of a shareholder, being an individual, if—
(a) the dividend is paid by the company by an account payee cheque; and
(b) the amount of such dividend or, as the case may be, the aggregate of the amounts of such
dividend distributed or paid or likely to be distributed or paid during the financial year by the
company to the shareholder, does not exceed 4[two thousand five hundred rupees]:
Provided further that the provisions of this section shall not apply to such income credited or paid
to—
(a) the Life Insurance Corporation of India established under the Life Insurance Corporation
Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial
interest;
(b) the General Insurance Corporation of India (hereafter in this proviso referred to as the
Corporation) or to any of the four companies (hereafter in this proviso referred to as such
company), formed by virtue of the schemes framed under sub-section (1) of section 16 of the
General Insurance Business (Nationalisation) Act, 1972 (57 of 1972), in respect of any shares
owned by the Corporation or such company or in which the Corporation or such company has full
beneficial interest;
(c) any other insurer in respect of any shares owned by it or in which it has full beneficial
interest:]
5[Provided also that no such deduction shall be made in respect of any dividends referred to
in section 115-O.]
6[194A. Interest other than “Interest on securities”.—(1) Any person, not being an individual or a
Hindu undivided family, who is responsible for paying to a resident any income by way of interest other
than 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 thereon at the rates in force:
7[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or
turnover from the business or profession carried on by him exceed the monetary limits specified under
clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial
year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]
8[Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is
credited to any account, whether called “Interest payable account” or “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.]
or sub-clause
or sub-clause
or
sub-clause
or sub-clause
of clause
of section 2, deduct from the amount of such dividend,
income-tax 2*** at the rates in force:
3[Provided that no such deduction shall be made in the case of a shareholder, being an individual, if—
the dividend is paid by the company by an account payee cheque; and
the amount of such dividend or, as the case may be, the aggregate of the amounts of such
dividend distributed or paid or likely to be distributed or paid during the financial year by the
company to the shareholder, does not exceed 4[two thousand five hundred rupees]:
Provided further that the provisions of this section shall not apply to such income credited or paid
to—
the Life Insurance Corporation of India established under the Life Insurance Corporation
Act, 1956 (31 of 1956), in respect of any shares owned by it or in which it has full beneficial
interest;
the General Insurance Corporation of India (hereafter in this proviso referred to as the
Corporation) or to any of the four companies (hereafter in this proviso referred to as such
company), formed by virtue of the schemes framed under sub-section
of section 16 of the
General Insurance Business
Act, 1972 (57 of 1972), in respect of any shares
owned by the Corporation or such company or in which the Corporation or such company has full
beneficial interest;
any other insurer in respect of any shares owned by it or in which it has full beneficial
interest:]
5[Provided also that no such deduction shall be made in respect of any dividends referred to
in section 115-O.]
6[194A. Interest other than “Interest on securities”.—
Any person, not being an individual or a
Hindu undivided family, who is responsible for paying to a resident any income by way of interest other
than 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 thereon at the rates in force:
7[Provided that an individual or a Hindu undivided family, whose total sales, gross receipts or
turnover from the business or profession carried on by him exceed the monetary limits specified under
clause
or clause
of section 44AB during the financial year immediately preceding the financial
year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.]
8[Explanation.—For the purposes of this section, where any income by way of interest as aforesaid is
credited to any account, whether called “Interest payable account” or “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.]