No Deduction in Certain Cases [Section 197A] :
(1) This section enables an individual, who is resident in India and whose estimated total income of the previous year is less than the basic exemption limit, to receive dividends and any sum out of National Savings Scheme Account, without deduction of tax at source under sections 194 and 194EE, on furnishing a declaration in duplicate in the prescribed form and verified in the prescribed manner [Sub-section (1)].
(2) The declaration in the above form is to be furnished by the declarant to the person responsible for paying any income of the nature referred to in sections 194 or 194EE. The declaration will have to be to the effect that the tax on the estimated total income of the declarant of the previous year in which such income is to be included in computing his total income will be nil [Sub-section (1)].
(3) No deduction of tax shall be made under section 192A or 193 or 194A or 194DA, where a person, who is not a company or a firm, furnishes to the person responsible for paying any income of the nature referred to in section 192A or 193 or 194A or 194DA, a declaration in writing in duplicate in the prescribed form to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil [Sub-section (1A)].
(4) The provisions of this section will, however, not apply where –
(i) the amount of any income from dividends,
(ii) payments in respect of deposits under National Savings Schemes, etc. or
(iii) income from interest on securities or interest other than “interest on securities” or units or
(iv) the aggregate of the amounts of such incomes in (1), (2) and (3) above credited or paid or likely to be credited or paid during the previous year in which such income is to be included exceeds the maximum amount which is not chargeable to income-tax [Sub-section (1B)].
(5) For a senior citizen, who is of the age of 60 years or more at any time during the previous year, no deduction of tax shall be made under section 192A or section 193 or section 194 or section 194A or section 194DA or section 194EE, if they furnish a declaration in writing to the payer, of any amount or income mentioned in the above sections [Sub-section (1C)].
(6) Such declaration should be in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. The restriction contained in sub-section (1B) will not apply to senior citizens [Sub-section (1C)].
(7) No deduction of tax shall be made by an Offshore Banking Unit from the interest paid on –
(i) deposit made by a non-resident/not-ordinarily resident on or after 1.4.2005; or
(ii) borrowing from a non-resident/not-ordinarily resident on or after 1.4.2005.
This provision is contained in sub-section (1D).
(8) No deduction of tax at source shall be made from any payment to any person for, or on behalf of, the New Pension System Trust referred in section 10(44).
(9) No deduction of tax shall be made from specified payments to such institution, association or body or class of institutions or associations or bodies as may be notified by the Central Government in the Official Gazette in this behalf. Therefore, in respect of such specified payments made to notified bodies, no tax is to be deducted at source.
Accordingly, the Central Government has notified that no deduction of tax shall be made from the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934, excluding a foreign bank –
(i) bank guarantee commission,
(ii) cash management service charges,
(iii) depository charges on maintenance of DEMAT accounts ,
(iv) charges for warehousing services for commodities,
(v) underwriting service charges,
(vi) clearing charges (MICR charges) and
(vii) credit card or debit card commission for transaction between the merchant establishment and acquirer bank,
(10) On receipt of the declaration referred to in sub-section (1), (1A) or (1C), the person responsible for making the payment will be required to deliver or cause to be delivered to the Chief Commissioner or Commissioner, one copy of the declaration on or before the 7th day of the month following the month in which the declaration is furnished to him [Section 197A(2)].