Section 194LBA - Tax deduction from income from units of business trust - Income Tax - Ready Reckoner - Income Tax

Section 194LBA : Tax Deducted from Income from units of Business Trust This section has been inserted with effect from 01.10.2014. Tax is to be deductible if a business trust distributes any income referred to in section 115UA being of the nature referred to in section 10(23FC) or section 10(23FCA) to its unit holder. Time of deduction At the time of credit or payment, whichever is earlier . Rate of TDS : (i) If the recipient is Resident in India 10% in case of interest or dividend received or receivable from SPV or rental income (received by a real estate investment trust) (ii) If the recipient is a Non-resident (Other than Company) or a foreign company Income referred in section 10(23FC)(a) (i.e. Interest income received from SPV) 5% (+HEC + SC) Income referred in section 10(23FC)(b) (i.e. Dividend income received from SPV) 10% (+HEC + SC) Income referred in section 10(23FCA) (i.e. rental income received by a real estate investment trust) if recipient is a non-resident (Other than company) - 30% (+HEC + SC) [ As per Part II of Schedule First of Finance Act, 2025 ] if recipient is a foreign company - 35% (+HEC + SC) [ As per Part II of Schedule First of Finance Act, 2025 ] Non-Applicability Nothing contained in sections 194LBA(1) and (2) shall apply in respect of income of the nature referred to in sub-clause (b) of clause (23FC) of section 10, if the special purpose vehicle referred to in the said clause has not exercised the option under section 115BAA. Note:- If the recipient doesn t have PAN or doesn t furnish PAN to deductor TDS Deducted as per the provision specified under section 206AA(1) Tax shall be deducted at the higher of the following rates, namely:- (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of 20%. Section 10(23FC) - any income of a business trust by way of- (a) interest received or receivable from a special purpose vehicle; or (b) dividend received or receivable from a special purpose vehicle; Explanation.-For the purposes of this clause, the expression special purpose vehicle means an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the regulations under which such trust is granted registration; section 10(23FCA) - any income of a business trust, being a real estate investment trust, by way of renting or leasing or letting out any real estate asset owned directly by such business trust. Explanation.-For the purposes of this clause, the expression real estate asset shall have the same meaning as assigned to it in clause (zj) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 made under the Securities and Exchange Board of India Act, 1992;]