{"id":1482,"date":"2025-02-07T12:49:43","date_gmt":"2025-02-07T07:19:43","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=1482"},"modified":"2025-06-26T15:56:13","modified_gmt":"2025-06-26T10:26:13","slug":"section-194lbc-of-income-tax-act","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/","title":{"rendered":"Section 194LBC: New TDS Rates on Securitization Trust Income"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"538\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/Section-194LBC-1024x538.png\" alt=\"\" class=\"wp-image-1483\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/Section-194LBC-1024x538.png 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/Section-194LBC-300x158.png 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/Section-194LBC-768x403.png 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2025\/02\/Section-194LBC.png 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Introduction\" >Introduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Investor\" >Investor<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Securitization_Trust\" >Securitization Trust<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Purpose\" >Purpose<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Who_is_Liable_to_Deduct_Tax\" >Who is Liable to Deduct Tax?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#When_to_Deducted\" >When to Deducted?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#TDS_Rates\" >TDS Rates<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Note\" >Note<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#TDS_Compliance_Requirements\" >TDS Compliance Requirements<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#When_To_Deposit\" >When To Deposit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Who_is_required_to_issue_TDS_Certificate\" >Who is required to issue TDS Certificate?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Where_To_Report\" >Where To Report?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#Deadlines_To_File_Form_26Q_and_27Q\" >Deadlines To File Form 26Q and 27Q<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.caclubindia.com\/guide\/section-194lbc-of-income-tax-act\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 194LBC was introduced by Finance Act, 2016 with effective from June 1, 2016.<\/p>\n\n\n\n<p>It applies to securitization trusts, which pool funds and distribute income to investors.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Investor\"><\/span>Investor<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Any individual, HUF, company, or non-resident investing in a securitization trust.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Securitization_Trust\"><\/span>Securitization Trust<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Defined u\/s 115TCA which has been approved by RBI or SEBI for securitization purposes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Purpose\"><\/span>Purpose<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To ensures TDS deduction on income distributed by securitization trusts for tax transparency.<\/li>\n\n\n\n<li>To prevents tax evasion by deducting tax at the source.<\/li>\n\n\n\n<li>To ensures timely tax collection from both resident and non-resident investors.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_Liable_to_Deduct_Tax\"><\/span>Who is Liable to Deduct Tax?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The person responsible for making the payment to an investor in respect of an investment in a securitization trust being referred in Section 115TCA is responsible for deducting TDS before making any payment to the investor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_to_Deducted\"><\/span>When to Deducted?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>At the time of payment or crediting the payee, whichever is earlier.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Rates\"><\/span>TDS Rates<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Category<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Current Rates<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Proposed Rates<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Resident<\/td><td class=\"has-text-align-center\" data-align=\"center\">Individual or HUF &#8211; 25%<br>Other Resident (Companies, Firms, AOPs) &#8211; 30%<\/td><td class=\"has-text-align-center\" data-align=\"center\">Individual or HUF &#8211; 10%<br>Other Resident (Companies, Firms, AOPs) &#8211; 10%<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Non-Resident<\/td><td class=\"has-text-align-center\" data-align=\"center\">Foreign Company &#8211; 30%<br>Other than Foreign Company &#8211; 40%<\/td><td class=\"has-text-align-center\" data-align=\"center\">No Changes<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Note\"><\/span>Note<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per Budget 2025, it is proposed that <strong><a href=\"https:\/\/www.caclubindia.com\/guide\/tds-rates\/\">TDS rate u\/s 194LBC of the Act<\/a><\/strong> be reduced from 25% and 30% to 10% as this sector is sufficiently organized and regulated.<\/p>\n\n\n\n<p>This amendment will take effect from the <strong>1st day of April 2025<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TDS_Compliance_Requirements\"><\/span>TDS Compliance Requirements<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"When_To_Deposit\"><\/span>When To Deposit?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The deducted amount must be deposited with the government within 7th day of the following month.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_is_required_to_issue_TDS_Certificate\"><\/span>Who is required to issue TDS Certificate?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The payer is required to issue a TDS certificate to the payee as it serves as proof of tax deduction and payee can use it to claim credit while filing their ITR.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Where_To_Report\"><\/span>Where To Report?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The deducted amount made u\/s 194LBC must be reported in:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Form 26Q (Residents).<\/li>\n\n\n\n<li>Form 27Q (Non-residents).<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deadlines_To_File_Form_26Q_and_27Q\"><\/span>Deadlines To File Form 26Q and 27Q<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The deadlines for filing these forms are:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Month<\/strong><\/td><td><strong>Due Date<\/strong><\/td><\/tr><tr><td>Quarter 1 (April-June)<\/td><td>31st July<\/td><\/tr><tr><td>Quarter 2 (July-September)<\/td><td>31st October<\/td><\/tr><tr><td>Quarter 3 (October-December)<\/td><td>31st January<\/td><\/tr><tr><td>Quarter 4 (January-March)<\/td><td>31st May<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Once filed, investors can track TDS deductions through their Form 26AS or by obtaining a TDS certificate from the payer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1738911040610\"><strong class=\"schema-faq-question\">What is Securitization Trust?<\/strong> <p class=\"schema-faq-answer\">Securitization trust refers to a trust that has been set up for the purpose of securitization and approved by the relevant regulatory authority, such as the RBI or the SEBI.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1738911093772\"><strong class=\"schema-faq-question\">What happens if TDS is not deducted or deposited on time?<\/strong> <p class=\"schema-faq-answer\">Non-compliance may lead to:<br\/>Interest penalties on delayed TDS payments<br\/>Fines for late filing of TDS returns<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1738911120369\"><strong class=\"schema-faq-question\">How does TDS impact investors?<\/strong> <p class=\"schema-faq-answer\">Investors receive income after TDS deduction and can claim a tax credit while filing their ITR.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1738911142378\"><strong class=\"schema-faq-question\">Can an investor claim a refund of excess TDS?<\/strong> <p class=\"schema-faq-answer\">Yes, if the total tax liability is lower than the TDS deducted, the investor can claim a refund while filing the income tax return.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Introduction Section 194LBC was introduced by Finance Act, 2016 with effective from June 1, 2016. It applies to securitization trusts, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1483,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1482","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Section 194LBC: New TDS Rates on Securitization Trust Income - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"Section 194LBC mandates TDS on income distributed by securitization trusts to investors. 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