Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations [Section 196] :

(1) 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 section 10(23D).

(2) This provision for non-deduction is when such sum is payable to the above entities by way of –

(i) interest or dividend in respect of securities or shares –

(a) owned by the above entities; or

(b) in which they have full beneficial interest or

(ii) any income accruing or arising to them.