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

Section 194LBB of Income Tax Act 1961 amended by Finance Act 2022 and Income-tax Rules, 1962. Income in respect of units of investment fund.

Amended and updated notes on section 194LBB 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 Income in respect of units of investment fund.

Chapter XVII (Sections 190 to 234G) of the Income Tax Act 1961 deals with the provisions related to collection and recovery of tax. Section 194LBB of IT Act 1961 provides for Income in respect of units of investment fund.

Recently, we have discussed in detail section 194LBA (Certain income from units of a business trust) of IT Act 1961. Today, we learn the provisions of section 194LBB of Income-tax Act 1961. The amended provision of section 194LBB 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 194LBB 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-194LBB: Income in respect of units of investment fund

Where any income, other than that proportion of income which is of the same nature as income referred to in clause (23FBB) of section 10, is payable to a unit holder in respect of units of an investment fund specified in clause (a) of the Explanation 1 to section 115UB, the person responsible for making the payment shall, at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon,—

  • (i) at the rate of ten per cent, where the payee is a resident;
  • (ii) at the rates in force, where the payee is a non-resident (not being a company) or a foreign company :

Provided that where the payee is a non-resident (not being a company) or a foreign company, no deduction shall be made in respect of any income that is not chargeable to tax under the provisions of the Act.

Explanation: For the purposes of this section,—

(a) “unit” shall have the meaning assigned to it in clause (c) of the Explanation 1 to section 115UB;

(b) where any income as aforesaid is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly.


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