Where any income is payable to an offshare funds that is any payment to fund, institution, association of body whether incorporated or not, which is established outside India in respect of units subscribed in foreign currency or where any long term capital gain arises on the transfer of such units, the payer of such income is liable to deduct tax on such income at the rate of 10%.
In the case of BOI and AOP surcharge is payable @ 10% on income tax, provided the amount payable exceeds Rs. 10 Lakh. Surcharge is payable in case of firm @ 10%, provided such income exceeds Rs. 1 crore. However, non-domestic company is liable to pay surcharge @ 2.5% on income tax, provided such income exceeds Rs. 1 crore.
Education cess and secondary and higher education cess is payable @2% and 1% respectively on the aggregate amount of income tax and surcharge.
Tax deduction may be made at the time of credit of such income to the amount of the payee or at the time of payment, whichever is earlier. The mode of payment may be in cash or by cheque or any other mode of payment.
Tags-section 196b of income tax act,section 196b tds,tds section 196b,income tax section 196b