40. Amendment of section 115R.
In section 115R of the Income-tax Act, in sub-section (2),––
(A) for clause (i) to clause (iii), the following clauses shall be substituted, namely:––
“(i) twenty-five per cent. on income distributed to any person being an individual or a Hindu undivided family by a money market mutual fund or a liquid fund;
(ii) thirty per cent. on income distributed to any other person by a money market mutual fund or a liquid fund;
(iii) ten per cent. on income distributed to any person by an equity oriented fund;
(iv) twenty-five per cent. on income distributed to any person being an individual or a Hindu undivided family by a fund other than a money market mutual fund or a liquid fund or an equity oriented fund; and
(v) thirty per cent. on income distributed to any other person by a fund other than a money market mutual fund or a liquid fund or an equity oriented fund:”;
(B) in the second proviso, clause (b) shall be omitted.
Notes on Clauses:
Clause 40 of the Bill seeks to amend section 115R of the Income-tax Act relating to tax on distributed income to unit holders.
The said section, inter alia, provides that any amount of income distributed by the specified company or a Mutual Fund to its unit holders shall be chargeable to tax and such specified company or Mutual Fund shall be liable to pay additional income-tax on such distributed income at the rate specified in the said section. However, in respect of any income distributed to a unit holder of equity oriented funds in respect of any distribution made from such funds is not chargeable to tax under the said section.
It is proposed to amend the said section so as to provide that where any income is distributed to any person by an equity oriented fund, the fund shall be liable to pay additional income-tax at the rate of ten per cent. on income so distributed.
It is further proposed to omit clause (b) of the second proviso to sub-section (2) which is consequential in nature.
These amendments will take effect from 1st April, 2018.
