1(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any income in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India 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 twenty per cent :
2 Provided that no deduction shall be made under this section from any such income credited or paid on or after the 1st day of April, 2003.
(2) Notwithstanding anything contained in sub-section (1), no deduction of tax shall be made from any income payable in respect of units of the Unit Trust of India to a non-resident Indian or a non-resident Hindu undivided family, where the units have been acquired from the Unit Trust of India out of the funds in a Non-resident (External) Account maintained with any bank in India or by remittance of funds in foreign currency, in accordance, in either case, with the provisions of 3 the Foreign Exchange Management Act, 1999 (42 of 1999), and the rules made thereunder.
Explanation.-For the purposes of this section-
(a) "foreign currency" shall have the meaning assigned to it in 3 the Foreign
Exchange Management Act, 1999 (42 of 1999);
(b) "non-resident Indian" shall have the meaning assigned to it in clause (e) of section 115C;
(c) "Unit Trust of India" means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963);
(d) where any income as aforesaid is credited to any account, whether called
"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.
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1. Subs. by Act 22 of 1995, s. 37, for section 196A (w.e.f. 1-7-1995).
2. Ins. by Act 32 of 2003, s. 81 (w.e.f. 1-4-2003). Earlier the proviso omitted
by Act 20 of 2002, s. 82 (w.e.f.1-6-2002) which was inserted by Act 27 of 1999,
s. 75 (w.e.f.1-6-1999).
3. Subs. by Act 17 of 2013, s. 4, for "the Foreign Exchange Regulation Act, 1973
(46 of 1973)" (w.e.f. 1-4-2013).
Section 195A Income payable net of tax
Section 196A Income in respect of units of non-residents
Section 196B Income from units
Section 196C Income from foreign currency bonds or shares of Indian company
Section 196D Income of Foreign Institutional Investors from securities
Section 197 Certificate for deduction at lower rate
Section 197A No deduction to be made in certain cases
Section 198 Tax deducted is income received