The provisions relating to TDS on income from investment in securitisation trusts have been restructured under the Income-tax Act, 2025. The earlier Section 194LBC of the Income-tax Act, 1961 is now covered under Section 393(1) [Table: Sl. No. 4(iv)], effective from 1st April, 2026.
This restructuring introduces a tabular classification while retaining the provisions relating to deduction of tax at source on income distributed to investors by securitisation trusts.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(1)
- Table Reference: Table: Sl. No. 4(iv)
- Nature of Payment: Income in respect of an investment in a securitisation trust payable to an investor
- Earlier Section (IT Act 1961): Section 194LBC
- Return Form: 26Q and 27Q
- Code (for return filing): 1018
Applicability of TDS on Securitisation Trust Income
TDS is required to be deducted on income paid or credited to an investor in respect of an investment in a securitization trust. The responsibility to deduct tax lies with the person making such payment, and the provisions apply to the investor receiving such income.
Time of Deduction
- At the time of credit of income to the account of the investor, or
- At the time of payment by cash, cheque, draft or any other mode
Rate of TDS
- 10% on income paid to investors
- 20% if PAN is not furnished, as per applicable provisions
If PAN is not furnished, TDS shall be deducted at 20%
Threshold Limit
- No threshold limit
- TDS is applicable on the entire income
Important Notes
- TDS is required at the time of income distribution
- Applicable to all investors receiving income from securitization trusts
Additional Applicability for Non-Residents (As per IT Act 2025)
| Nature of Payment | Previous Section (IT Act 1961) | New Section Reference | Rate | Remarks |
|---|---|---|---|---|
| Any distributed income referred to in section 223, being of the nature referred to in Schedule V [Table: Sl. No. 4] | Section 194LBC | 393(2) [Table: Sl. No. 7] | 35% – Non-resident company 30% – Non-resident other than company | Distributed income from securitisation trust |
| Any income in respect of an investment in a securitisation trust specified in section 221 | Section 194LBC | 393(2) [Table: Sl. No. 9] | 10% – Resident 35% – Non-resident company 30% – Non-resident other than company | Covers both resident and non-resident cases |
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