Section - 196D (of Income Tax Act, 1961), Income of Foreign Institutional Investors from securities

(1) Where any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD (of Income Tax Act, 1961), not being income by way of interest referred to in section 194LD (of Income Tax Act, 1961), is payable to a Foreign Institutional Investor, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode, whichever is earlier, deduct income-tax thereon at the rate of twenty per cent.

(1A) Where any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD (of Income Tax Act, 1961), not being income by way of interest referred to in section 194LD (of Income Tax Act, 1961), is payable to a specified fund [referred to in clause (c) of the Explanation to clause (4D) of section 10 (of Income Tax Act, 1961)], the person responsible for making the payment shall, at the time of credit of such income to the account of the payee, or at the time of payment thereof by any mode, whichever is earlier, deduct the income-tax thereon at the rate of ten per cent:

Provided that no deduction shall be made in respect of an income exempt under clause (4D) of section 10 (of Income Tax Act, 1961)

(2) No deduction of tax shall be made from any income, by way of capital gains arising from the transfer of securities referred to in section 115AD (of Income Tax Act, 1961), payable to a Foreign Institutional Investor.