TDS on Income from Bonds or GDRs
Introduction
TDS must be deducted under section 196C on interest, dividends, and long-term capital gains paid to non-residents for Bonds or Global Depository Receipts (GDRs) purchased in foreign currency.
Key Provisions
- Deductor:Any person making payments related to:
o Interest or dividend on Bonds or GDRs.
o Long-term capital gains (LTCG) from transfer of such Bonds or GDRs.
- Deductee:Any non-resident person or foreign company receiving such income.
- Time of Deduction:At the time of credit or payment, whichever is earlier.
Rate of TDS
- 12.5% on long-term capital gains
- 10% on interest or dividends from Bonds or GDRs.
- Cess and Surcharge shall be applied.
- Higher rates apply if PAN is not provided (Section 206AA).
Compliance Requirements
- Lower/Nil Deduction Certificate:Not available under Section 197.
- Deposit of TDS:
o Challan ITNS 281 within 7 days from the end of the deduction month.
o For March deductions, deposit by 30th April.
o Government offices depositing TDS without a challan must deposit the TDS on the same day on which the tax was deducted.
- TDS Statement Filing:Quarterly submission in Form 27Q.
- TDS Certificate:Form 16A must be issued within 15 days from the due date of TDS statement filing.
Consequences of Non-Compliance
- Failure to Deduct or Deposit TDS:
o Interest liability under Section 201.
o Penalty under Section 271C (up to the undeducted amount).
o Prosecution under Section 276B.
- Failure to Furnish TDS Statement:
o Rs. 200 per day penalty under Section 234E (limited to TDS amount).
o Additional penalties under Sections 271H and 272A.
- Failure to Issue TDS Certificate: Penalty underSection 272A.