Section 194LBA of Income Tax Act for AY 2023-24

Section 194LBA of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules, 1962. Certain income from units of a business trust.

Amended and updated notes on section 194LBA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to Certain income from units of a business trust.

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 194LBA of IT Act 1961 provides for Certain income from units of a business trust.

Recently, we have discussed in detail section 194LB (Income by way of interest from infrastructure debt fund) of IT Act 1961. Today, we learn the provisions of section 194LBA of Income-tax Act 1961. The amended provision of section 194LBA is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 194LBA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962 as provided by Ministry of Law and Justice, Government of India.

Section-194LBA: Certain income from units of a business trust

Section 194LBA(1) of Income Tax Act

Where any distributed income referred to in section 115UA, being of the nature referred to in clause (23FC) or clause (23FCA) of section 10, is payable by a business trust to its unit holder being a resident, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.

Section 194LBA(2) of Income Tax Act

Where any distributed income referred to in section 115UA, being of the nature referred to in clause (23FC) of section 10, is payable by a business trust to its unit holder, being a non-resident (not being a company) or a foreign company, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent in case of income of the nature referred to in sub-clause (a) and ten per cent in case of income of the nature referred to in sub-clause (b), of the said clause.

[Sub-section (2) of section 194LBA has been amended w.e.f. 01.04.2020 by the Finance Act 2020]

Section 194LBA(2A) of Income Tax Act

(2A) Nothing contained in sub-sections (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.

[Sub-section (2A) of section 194LBA has been inserted w.e.f. 01.04.2020 by the Finance Act 2020]

Section 194LBA(3) of Income Tax Act

Where any distributed income referred to in section 115UA, being of the nature referred to in clause (23FCA) of section 10, is payable by a business trust to its unit holder, being a non-resident (not being a company), or a foreign company, the person responsible for making the payment shall at the time of credit of such payment to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.


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