Section 194LBC: TDS on payment of Income in respect of investment in securitization trust.

This article briefly covers about Important provisions of Section 194LBC of Income Tax act 1961- TDS on payment of Income in respect of investment in securitization trust.

Section: 194LBC.

Payer(who is liable to deduct TDS): Securitisation trust

Payee:
Investor, being a resident or,
non-resident (not being a company) or a foreign company.

Nature of Payment:
Income in respect of investment in securitization trust.

TDS Rate:

No	Payee	Rate
1	Resident Individual or HUF	25%
2	Resident-any other person	30%
3	NR or Foreign Company	rates in force

Timing of Deduction:
At the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

Explanation.—For the purposes of this section,—

(a)"investor" means a person who is holder of any securitised debt instrument or securities or security receipt issued by the securitisation trust.

(b) where any income as aforesaid is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly.

Securitisation trust means:

a trust, being a—

(i) "special purpose distinct entity" as defined in clause (u) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) and the Securities Contracts (Regulation) Act, 1956 (42 of 1956), and regulated under the said regulations; or

(ii) "Special Purpose Vehicle" as defined in, and regulated by, the guidelines on securitisation of standard assets issued by the Reserve Bank of India; or

(iii) trust set-up by a securitisation company or a reconstruction company formed, for the purposes of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), or in pursuance of any guidelines or directions issued for the said purposes by the Reserve Bank of India,
which fulfils such conditions, as may be prescribed.

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