The provisions relating to TDS on interest income from infrastructure debt funds payable to non-residents have been restructured under the Income-tax Act, 2025. The earlier Section 194LB of the Income-tax Act, 1961 is now covered under Section 393(2) [Table: Sl. No. 5], effective from 1st April, 2026.
This restructuring retains the concessional rate of tax deduction on interest payments made by infrastructure debt funds to non-residents, while aligning the provision with the updated legislative framework.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 393(2)
- Table Reference: Table: Sl. No. 5
- Nature of Payment: Interest from Infrastructure Debt Fund
- Earlier Section (IT Act 1961): Section 194LB
- Return Form: 27Q
- Code (for return filing): 1044
1. Deduction Conditions-
TDS shall be deducted for interest from infrastructure debt funds if the following conditions apply:
- The interest income is paid by an infrastructure debt fund referred to in section 10(47)
- Interest income is paid to a non-resident or to a foreign company
2. Time of Deduction:
Deduction shall be made by the payer at the earlier of:
- At the time of credit of income to the account of the recipient, or
- At the time of payment in cash or draft or cheque or any other mode
3. Rate of Deduction:
TDS shall be deducted at the rate of 5%
Use TDSMAN Software to file seamless & error-free TDS / TCS returns, without any professional help.