1008. Clarification regarding payment of income by way of interest on securities and rent made to Regimental Funds or Non-public Fund established by Armed Forces of Union for welfare of past and present members of such forces or their dependants, whose income is exempt under section 10(23AA)
Circular No. 735 was issued by the Central Board of Direct Taxes on 30 January 1996. Its subject is 1008. Clarification regarding payment of income by way of interest on securities and rent made to Regimental Funds or Non-public Fund established by Armed Forces of Union for welfare of past and present members of such forces or their dependants, whose income is exempt under section 10(23AA).
This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.
Directs that no tax be deducted at source under section 193 or section 194-I from the income of Regimental Funds or Non-public Funds established by the Armed Forces of the Union for the welfare of past and present members of those forces or their dependants. The reason given is that the income of these organisations is exempt under section 10(23AA). It therefore covers interest on securities and rent paid to or on behalf of such funds.
The question of deduction at source under sections 193 and 194-I from income received by any person on behalf of such funds was brought to the Board's notice, and representations were received on behalf of Regimental and Non-public Funds.
1008. Clarification regarding payment of income by way of interest on securities and rent made to Regimental Funds or Non-public Fund established by Armed Forces of Union for welfare of past and present members of such forces or their dependants, whose income is exempt under section 10(23AA)
1. The issue of deduction of income-tax at source under section 193 and section 194-I of the Income-tax Act from any income received by any person on behalf of any Regimental Fund or Non-public Fund established by the Armed Forces of Union for the welfare of past and present members of such forces or their dependants, has been brought to the notice of the Board. Representations have also been received on behalf of Regimental Funds and Non-public Fund established by the Armed Forces.
2. The matter with regard to regimental fund or non-public fund established by Armed Forces has been examined in the Board. Since the income of these organisations is exempt under section 10 (23AA) of the Income-tax Act, it has been decided that no tax may be deducted at source under sections 193 and 194-I from the income of such Funds.
Circular : No. 735, dated 30-1-1996.
In a TDS survey or an order under section 201 asking a payer why no tax was deducted on rent or interest paid to a regimental fund.
Source: the Income Tax Department’s own published text — its page for this instrument.