Section 223 — Tax on income of unit holder and business trust

Old Act equivalent: Section 115UA of IT Act 1961 Sub-part: F—Special provisions relating to pass-through entities

Statutory Text

(1) Irrespective of anything contained in any other provisions of this Act, any income distributed by a business trust to its unit holders shall be deemed to be of the same nature and in the same proportion in the hands of the unit holder as it had been received by, or accrued to, the business trust. (2) Subject to the provisions of sections 196, 197 and 198, the total income of a business trust shall be charged to tax at the maximum marginal rate. (3) If in any tax year, the distributed income or any part thereof, received by a unit holder from the business trust is of the nature as referred to in Schedule V (Table: Sl. No. 3) or (Table: Sl. No. 4), then, such distributed income or part thereof shall be deemed to be income of such unit holder and shall be charged to tax as income of the tax year. (4) The provisions of sub-section (1) shall not apply in respect of any sum referred to in section 92(2)(k) received by a unit holder from a business trust. (5) Any person responsible for making payment of the income distributed on behalf of a business trust to a unit holder, shall furnish a statement to the unit holder and the prescribed authority, within such time and in such form and manner, as may be prescribed, giving the details of the nature of the income paid during the tax year and such other details, as may be prescribed. Tax on income of investment fund and its unit holders.

None.

None.

See statutory text above.

Applies to: Business trusts (REITs, InvITs) and their unit holders.
Conditions: Interest received by trust from SPV is pass-through income taxed in unit holders’ hands; rental income and certain other income taxed at trust level.
Time limits: None.
Monetary limits: Interest component: pass-through; Dividend from SPV: exempt in trust’s hands, taxed in unit holder’s hands; Capital gains: as per applicable provisions.
Exceptions: SPV dividend and interest: pass-through; other income taxed at trust level.