Section 194K | TDS on Income in Respect of Units of Mutual Fund

CA.R.S.KALRA | Last updated: 11 February 2021

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Quick Summary

Section 194K of the Income Tax Act mandates the deduction of Tax Deducted at Source (TDS) on income earned from units of Mutual Funds, specified undertakings, or specified companies. The standard TDS rate is 10%, though it was temporarily reduced to 7.5% between May 14, 2020, and March 31, 2021. TDS is required at the time of crediting the income or making the payment, whichever occurs first. However, this section does not apply if the total income credited or paid in a financial year does not exceed £5,000, or if the income is in the nature of capital gains.

194K. Any person responsible for paying to a resident any income in respect of- units of a Mutual Fund specified under clause (23D) of section 10 ; or units from the Administrator of the specified undertaking; or units from the specified company, shall, at the time of credit of such i

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FAQ :

Any person responsible for paying income in respect of units of a Mutual Fund, specified undertaking, or specified company to a resident is responsible for deducting TDS.

TDS must be deducted at the time of crediting the income to the payee's account or at the time of payment, whichever is earlier.

TDS is applicable if the income credited or paid during the financial year exceeds £5,000. For payments made between May 14, 2020, and March 31, 2021, the rate was 7.5%.

The standard rate of TDS under Section 194K is 10%.

Section 194K does not apply if the total income credited or paid to the payee in a financial year does not exceed £5,000, or if the income is of the nature of capital gains.