Section 196C deals with the tax deducted at source on the income from foreign currency bonds or shares of Indian company. Any income which is payable to a non-resident by way of interest or dividends in respect of bonds or Global Depository Receipts(GDR’s) as referred in Section 115AC by way of long term capital gain arising from the transfer of such bonds or GDR’s, the person responsible for making payment shall,
- at the time of credit of such income to the account of the payee or
- at the time of payment in cash or
- by issue of cheque or draft or by any other mode,
Whichever is earlier, deduct income tax @ 10%
No deduction is to be made in case of dividends referred to in section 115-O.
The updated chart of tax Deduction at Source for FY 2015-16 or AY 2016-17 is as under:
| Section | Nature of Payment | Rate-HUF/Individual % | Rate-Others % |
| 196C | Payment to non-residents | Rates in force | Rates in force |
Reference:
As Per Section 196C, of the Income Tax Act, 1961-
Income from foreign currency bonds or shares of Indian company.
- Where any income by way of interest or dividends in respect of [bonds or Global Depository Receipts] referred to in section 115AC or by way of long-term capital gains arising from the transfer of such [bonds or Global Depository Receipts] is payable to a non-resident, the person responsible for making the payment 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 the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.
Provided that no such deduction shall be made in respect of any dividends referred to in section 115-O.