A company must deduct ..................... at a prescribed rate from the interest payable on debentures if it exceeds the prescribed limit and is to be deposited with the tax authorities.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- Income tax.
According to Income Tax Act, 1961, a company must deduct income tax at a prescribed rate from the interest payable on debentures if it exceeds the prescribed limit. It is called Tax Deducted at Source (TDS) and is to be deposited with the tax authorities. Of course, the debentureholders can adjust this amount against the tax due from them.