Section 115R - Tax on distributed income to unit holders - Income-tax Act, 1961

1 [ Chapter XII-E Special Provisions Relating to tax ON DISTRIBUTED income Tax on distributed income to unit holders. 115R. (1) Notwithstanding anything contained in any other provisions of this Act and section 32 of the Unit Trust of India Act, 1963 (52 of 1963), 2 [ any amount of income distributed on or before the 31st day of March, 2002 by the Unit Trust of India to its unit holders ] shall be chargeable to tax and the Unit Trust of India shall be liable to pay additional income-tax on such distributed income at the rate of 3 [ ten ] per cent : Provided that nothing contained in this sub-section shall apply in respect of any income distributed to a unit holder of open-ended equity oriented funds in respect of any distribution made from such fund for a period of three years commencing from the 1st day of April, 1999. 4 [ (2) Notwithstanding anything contained in any other provision of this Act, any amount of income distributed by the specified company or a Mutual Fund to its unit holders 24 [ on or before the 31st day of March, 2020 ] shall be chargeable to tax and such specified company or Mutual Fund shall be liable to pay additional income-tax on such distributed income 5 [ at the rate of- 19 [(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:] 14 [ Provided that where any income is distributed by a mutual fund under an infrastructure debt fund scheme to a non-resident (not being a company) or a foreign company, the mutual fund shall be liable to pay additional income-tax at the rate of five per cent on income so distributed] 15 [Provided further that] nothing contained in this sub-section shall apply in respect of any income distributed,- (a) by the Administrator of the specified undertaking, to the unit holders; or 20 [***] 21 [Provided also that no additional income-tax shall be chargeable in respect of any amount of income distributed on or after the 1st day of September, 2019 by a specified Mutual Fund, out of its income derived from transactions made on a recognised stock exchange located in any International Financial Services Centre and where the Consideration for such transaction is paid or payable in convertible foreign exchange: ] 16 [ Explanation .-For the purposes of this sub-section,- (i) administrator and specified company shall have the meanings respectively assigned to them in the Explanation to clause (35) of section 10; 22 [ (ia) convertible foreign exchange means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999.) and the rules made thereunder; ] (ii) infrastructure debt fund scheme shall have the same meaning as assigned to it in clause (1) of regulation 49L of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). ]] 23 [ (iii) International Financial Services Centre shall have the meaning assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005.); (iv) recognised stock exchange shall have the meaning assigned to it in clause (ii) of Explanation 1 to clause (5) of section 43; (v) specified Mutual Fund means a Mutual Fund specified under clause (23D) of section 10- (a) located in any International Financial Services Centre; (b) of which all the units are held by non-residents; (vi) unit means beneficial interest of an investor in the fund; ] 17 [(2A) For the purposes of determining the additional income-tax payable in accordance with sub-section (2), the amount of distributed income referred therein shall be increased to such amount as would, after reduction of the additional income-tax on such increased amount at the rate specified in subsection (2), be equal to the amount of income distributed by the Mutual Fund.] (3) The person responsible for making payment of the income distributed by the Unit Trust of India or a Mutual Fund and the Unit Trust of India or the Mutual Fund, as the case may be, shall be liable to pay tax to the credit of the Central Government within fourteen days from the date of distribution or payment of such income, whichever is earlier. 18 [(3A) ***** ] (4) No deduction under any other provision of this Act shall be allowed to the Unit Trust of India or to a Mutual Fund in respect of the income which has been charged to tax under sub-section (1) or sub-section (2). ******************** Notes :- 1. Chapter XII-E, consisting of sections 115R to 115T, inserted by the Finance Act, 1999, w.e.f. 1-6-1999. 2 . Substituted for any amount of income distributed by the Unit Trust of India to its unit-holders by the Finance Act, 2002, w.e.f. 1-4-2003. 3. Substituted for twenty by the Finance Act, 2001, w.e.f. 1-6-2001. Earlier twenty was substituted for ten by the Finance Act, 2000, w.e.f. 1-6-2000. 4. Substituted by the Finance Act, 2003, w.e.f. 1-4-2003. Prior to its substitution, sub-section (2), as amended by the Finance Act, 2002, w.e.f. 1-4-2003, the Finance Act, 2001, w.e.f. 1-6-2001 and the Finance Act, 2000, w.e.f. 1-6-2000, read as under : (2) Notwithstanding anything contained in any other provisions of this Act, any amount of income distributed on or before the 31st day of March, 2002 by a Mutual Fund to its unit-holders shall be chargeable to tax and such Mutual Fund shall be liable to pay additional income-tax at the rate of ten per cent : Provided that nothing contained in this sub-section shall apply in respect of any income distributed to a unit holder of open-ended equity oriented funds in respect of any distribution made from such fund for a period of three years commencing from the 1st day of April, 1999. 5. Substituted for at the rate of twelve and one-half per cent by the Finance (No. 2) Act, 2004, w.r.e.f. 9-7-2004. 6. Substituted for clauses ( i ) and ( ii ) by the Finance Act, 2007, w.e.f. 1-4-2007. Prior to their substitution, clauses ( i ) and ( ii ) read as under : ( i ) twelve and one-half per cent on income distributed to any person being an individual or a Hindu undivided family; and ( ii ) twenty per cent on income distributed to any other person: 7. Word open-ended omitted by the Finance Act, 2006, w.e.f. 1-6-2006. 8. Words for a period of one year commencing from the 1st day of April, 2003 omitted by the Finance (No. 2) Act, 2004, w.r.e.f. 1-4-2004. 9. Inserted by the Finance Act, 2000, w.e.f. 1-6-2000. 10. For the words income distributed , the words income distributed to any person being an individual or a Hindu undivided family substituted vide Finance Act, 2011 w.e.f. 1.6.2011 11. Inserted vide Finance Act, 2011 w.e.f. 1.6.2011 12. For the words twenty per cent , the words thirty per cent substituted vide Finance Act, 2011 w.e.f. 1.6.2011 13. Substituted vide the Finance Act 2013 w.e.f. 1st day of June, 2013 , before it was read as twelve and one-half per cent . 14. Inserted vide the Finance Act 2013 w.e.f. 1st day of June, 2013 15. Substituted vide the Finance Act 2013 w.e.f. 1st day of June, 2013 , before it was read as Provided that . 16. Substituted vide the Finance Act 2013 w.e.f. 1st day of June, 2013 , before it was read as Explanation .-For the purposes of this sub-section, Administrator and specified company shall have the meanings respectively assigned to them in the Explanation to clause (35) of section 10. 17. Inserted vide THE FINANCE (No. 2) ACT, 2014 w.e.f. 1st day of October, 2014 18. Omitted vide THE FINANCE (No. 2) ACT, 2014 w.e.f. 1st day of April, 2015 before it was read as, 9 [ (3A) The person responsible for making payment of the income distributed by the Unit Trust of India or a Mutual Fund and the Unit Trust of India or the Mutual Fund, as the case may be, shall on or before the 15th day of September in each year, furnish to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving the details of the amount of income distributed to unit holders during the previous year, the tax paid thereon and such other relevant details as may be prescribed .] 19. Substituted vide THE FINANCE ACT, 2018 , before it was read as, 6 [(i) twenty-five per cent on 10 [income distributed to any person being an individual or a Hindu undivided family] by a money market mutual fund or a liquid fund; 11 [(ia) thirty per cent on income distributed to any other person by a money market mutual fund or a liquid fund;] (ii) 13 [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; and (iii) 12 [thirty per cent] on income distributed to any other person by a fund other than a money market mutual fund or a liquid fund:]] 20. Omitted vide THE FINANCE ACT, 2018 , before it was read as, (b) to a unit holder of 7 [ *** ] equity oriented funds in respect of any distribution made from such funds 8 [ *** ]. 21. Inserted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-09-2019 22. Inserted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-09-2019 23. Inserted vide FINANCE (NO. 2) ACT, 2019 w.e.f. 01-09-2019 24. Inserted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2021