Section 194LBC | TDS on Income in Respect of Investment in Securitization Trust

CA.R.S.KALRA | Last updated: 23 February 2021

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Quick Summary

Section 194LBC outlines the Tax Deducted at Source (TDS) applicable to income received by investors from investments in securitisation trusts. The responsibility to deduct tax falls on the person making the payment to the investor. This deduction must occur at the earliest of when the income is credited to the investor's account or when the payment is actually made.

194LBC. (1) Where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation occurring after section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the

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FAQ :

Any person who pays income to an investor in respect of an investment in a securitisation trust is responsible for deducting tax under Section 194LBC.

TDS must be deducted at the earliest of the two events: when the income is credited to the investor's account or when the payment is actually made to the investor.

The TDS rate for resident individuals and Hindu Undivided Families (HUFs) is twenty-five per cent. A reduced rate of 18.75% was applicable from 14.05.2020 to 31.03.2021.

For resident payees other than individuals or HUFs, the TDS rate is thirty per cent. A reduced rate of 22.50% was applicable from 14.05.2020 to 31.03.2021.

For investors who are non-residents (not being a company) or foreign companies, TDS is deducted at the rates in force.