What is Income payable net of tax? What is Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations? Section 195A and 196 of Income Tax Act 1961

Income payable net of tax and Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations are defined under section 195A and 196 of Income Tax Act 1961. Provisions under these Sections are :

 

Section 195A of Income Tax Act "Income payable, net of tax

Section 195A. In a case other than that referred to in sub-section (1A) of section 192, where under an agreement or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by the person by whom the income is payable, then, for the purposes of deduction of tax under those provisions such income shall be increased to such amount as would, after deduction of tax thereon at the rates in force for the financial year in which such income is payable, be equal to the net amount payable under such agreement or arrangement.

 

Section 196 of Income Tax Act "Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations"

Section 196. 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.

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