Section 194K - Income in respect of units - Income-tax Act, 1961

6 [Income in respect of units. 194K. Any person responsible for paying to a resident any income in respect of (a) units of a Mutual Fund specified under clause (23D) of section 10; or (b) units from the Administrator of the specified undertaking; or (c) units from the specified company, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.: Provided that the provisions of this section shall not apply- (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not exceed five thousand rupees; or (ii) if the income is of the nature of capital gains. Explanation 1.- For the purposes of this section,- (a) Administrator means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002; (58 of 2002.) (b) specified company means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002; (58 of 2002.) (c) specified undertaking shall have the meaning assigned to it in clause (i) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002. (58 of 2002.) Explanation 2. For the removal of doubts, it is hereby clarified that where any income referred to in this section 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. ] 5 [ **** ] *************** NOTES:- 1. Substituted by the Finance Act, 2002, w.e.f. 1-6-2002. Prior to its substitution, section 194K, as inserted by the Finance Act, 1995, w.e.f. 1-7-1995 and amended by the Finance Act, 1999, w.e.f. 1-6-1999, read as under : '194K. Income in respect of units.- (1) Where any income is payable to a resident in respect of units of a Mutual Fund specified under clause (23D) of section 10 or of the Unit Trust of India 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 at the rate of,- (a) twenty per cent, if the payee is a company, and (b) fifteen per cent in the case of other payees : Provided that no deduction shall be made under this sub-section from any such income credited or paid on or after the 1st day of June, 1999. (2) The provisions of sub-section (1) shall not apply- (i) where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not exceed ten thousand rupees : Provided that the amount of ten thousand rupees shall be computed with reference to the income credited or paid,- (a) in respect of a branch office of the Mutual Fund or of the Unit Trust of India, as the case may be, and (b) under a particular scheme under which the units have been issued; (ii) to such income credited or paid before the 1st day of July, 1995; (iii) to such income credited or paid in respect of units issued under such scheme already in operation of the Mutual Fund or of the Unit Trust of India, as the Central Government may, by notification in the Official Gazette, specify in this behalf having regard to the plan of payment of income thereunder to the unit-holders; and (iv) to such income credited or paid in respect of units issued under any scheme of the Unit Trust of India to any institution or fund where such income is not liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of section 10. Explanation .-For the purposes of this section,- (a) Unit Trust of India means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963); (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 credit of such income to the account of the payee and the provisions of this section shall apply accordingly.' 2. Substituted for one thousand by the Finance Act, 2003, w.r.e.f. 1-8-2002. 3. Inserted by the Finance Act, 2003, w.e.f. 1-4-2003. 4 . Words two thousand five hundred should be substituted for the words one thousand . 5. Omitted vide THE FINANCE ACT, 2016 w.e.f. 1st day of June, 2016 before it was read as, 1 [Income in respect of units. 194K. Where any income is payable to a resident in respect of units of a Mutual Fund specified under clause ( 23D ) of section 10 or of the Unit Trust of India, 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 at the rate of ten per cent : Provided that the provisions of this section shall not apply where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not exceed 2 [two thousand five hundred] rupees : Provided further that the amount of one thousand 4 rupees shall be computed with reference to the income credited or paid- ( a ) in respect of a branch office of the Mutual Fund or of the Unit Trust of India, as the case may be, and ( b ) under a particular scheme under which the units have been issued : 3 [Provided also that no deduction shall be made under this section from any such income credited or paid on or after the 1st day of April, 2003.] Explanation .- For the purposes of this section,- ( a ) Unit Trust of India means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963); ( 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 credit of such income to the account of the payee and the provisions of this section shall apply accordingly.] 6. Inserted vide Finance Act, 2020 dated 27-03-2020 w.e.f. 01-04-2020