This article briefly covers Important provisions of Section 194LBA of Income tax act 1961: TDS [Tax deducted at source] on Payment of Certain income from units of a business trust.
Section : 194LBA
Payer (person liable to deduct tax):
Business Trust
Payee:
Unit holder being a resident or
non-resident (not being a company) or a foreign company
Nature of payment:
Any income distributed as per section 115UA, being of the nature referred to in clause (23FC) or clause (23FCA) of section 10.
TDS Rate:
No
Nature of Incomepaid
Resident
Non-resident or
Foreign company
1
Section 10[23FC][a]
10%
5%
2
Section 10[23FC][b]
10%
10%
3
Section 10[23FCA]
10%
Rates in force.
Timing of Deduction:
| No | Nature of Income paid |
Resident | Non-resident or Foreign company |
|---|---|---|---|
| 1 | Section 10[23FC][a] | 10% | 5% |
| 2 | Section 10[23FC][b] | 10% | 10% |
| 3 | Section 10[23FCA] | 10% | Rates in force. |
At the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
NOTES:
1. NO TDS in respect of income of the nature referred to in sub-clause (b) of clause (23FC) of section 10, if the special purpose vehicle referred to in the said clause has not exercised the option under section 115BAA.
2. Section 10[23FC]
Any income of a business trust by way of—
[a] interest received or receivable from a special purpose vehicle; or
[b] dividend referred to in sub-section [7] of section 115-O.
Explanation.—For the purposes of this clause, the expression "special purpose vehicle" means an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the regulations under which such trust is granted registration;
3. Section 10[23FCA]
Any income of a business trust, being a real estate investment trust, by way of renting or leasing or letting out any real estate asset owned directly by such business trust.
Explanation.—For the purposes of this clause, the expression "real estate asset" shall have the same meaning as assigned to it in clause [zj] of sub-regulation [1] of regulation 2 of the Securities and Exchange Board of India [Real Estate Investment Trusts] Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992 [15 of 1992];
Source “ Incometaxindia”
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