Amendment of section 194.
44. In section 194 of the Income-tax Act, in the second proviso, after clause (c), the following clauses shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2020, namely:––
‘(d) a “business trust”, as defined in clause (13A) of section 2, by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10;
(e) any other person as may be notified by the Central Government in the Official Gazette in this behalf.’.
Notes on Clauses:
Clause 44 of the Bill seeks to amend section 194 of the Income-tax Act relating to dividends.
The said section provides for deduction of tax at source on payment of dividends by an Indian company including dividends on preference shares within India. The second proviso to the said section provides that the provisions of that section shall not apply to such income credited or paid to certain insurance companies or insurers.
It is proposed to amend the second proviso to the said section to provide that the provisions of that section shall not apply to such income credited or paid to a business trust as defined in clause (13A) of section 2 by a special purpose vehicle referred to in the Explanation to clause (23FC) of section 10 or any other person as may be notified by the Central government in this behalf.
This amendment will take effect retrospectively from 1st April, 2020.
