Amendment of section 115U.
30. In section 115U of the Income-tax Act, after sub-section (5), before the Explanation 1, the following sub-section shall be inserted with effect from the 1st day of April, 2016, namely:-
“(6) Nothing contained in this Chapter shall apply in respect of any income, of a previous year relevant to the assessment year beginning on or after the 1st day of April, 2016, accruing or arising to, or received by, a person from investments made in a venture capital company or venture capital fund, being an investment fund specified in clause (a) of the Explanation 1 to section 115UB.”.
Notes on Clauses:
Clause 30 of the Bill seeks to amend section 115U of the Income-tax Act relating to tax on income in certain cases.
Section 115U of the Act provides that income accruing or arising or received by a person out of investment made in venture capital company or venture capital fund shall be taxable in the same manner, on current year basis, as if the person had made direct investment in the venture capital undertaking. The section further exempts the distribution by Venture capital company and the Venture capital fund to its investors from dividend distribution tax and tax deduction at source requirement.
It is proposed to amend the said section so as to provide that the existing pass through scheme contained in the provisions of section 10 (23FB) and section 115U shall not apply to such investment fund to which the new regime provided in section 10(23FBA) and section 115UB applies.
The amendment will take effect from 1st April, 2016 and accordingly apply in relation to the assessment year 2016-17 and subsequent years.
