Section 194LBA | TDS on Certain Income from Units of a Business Trust

About Section 194LBA

194LBA. (1) Where any distributed income referred to in section 115UA, being of the nature referred to in ⁵⁸[***] clause (23FC) or clause (23FCA) of section 10, is payable by a business trust to its unit holder being a resident, the person responsible for making the payment shall 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, deduct income-tax thereon at the rate of ten per cent.

• Where any distributed income referred to in section 115UA, being of the nature referred to in ⁵⁸[***] clause (23FC) of section 10, is payable by a business trust to its unit holder, being a non- resident (not being a company) or a foreign company, the person responsible for making the payment shall 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, deduct income-tax thereon at the rate of five per cent ⁵⁹[in case of income of the nature referred to in sub- clause (a) and ten per cent in case of income of the nature referred to in sub-clause (b), of the said clause].

59[(2A) Nothing contained in sub-sections (1) and (2) shall apply 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.]

• Where any distributed income referred to in section 115UA, being of the nature referred to in clause (23FCA) of section 10, is payable by a business trust to its unit holder, being a non-resident (not being a company), or a foreign company, the person responsible for making the payment shall 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, deduct income- tax thereon at the rates in

Important points

• Section 115UA is applicable to distributed income by a business trust to its unit holders.
• Distributed income to resident unit holders of the nature specified in clauses (23FC) or (23FCA) of Section 10.
• The nature of the income distributed by the business trust determines the TDS rate for non-resident unit holders or foreign companies.
• Sub-section (2A) mentions an exception for income falling under sub-clause (b) of clause (23FC) of Section 10. The tax deduction provisions do not apply if the special purpose vehicle referred to in the said clause has not exercised the option under Section 115BAA.
   

Who is responsible to deduct tax u/s 194LBA

Any person who makes payment of income [as per section 115UA] which is payable by a business trust to its unit holder is required to deduct tax at source. Such a unit holder can be a resident, non-resident (but not a company).

When to Deduct TDS under Section 194LBA

The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).

Rate of TDS under Section 194LBA