85[R1] 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), 86[R2] [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 87[R3] [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.

 

88[R4] [(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 shall be chargeable to tax and such specified company or Mutual Fund shall be liable to pay additional income-tax on such distributed income at the rate of twelve and one-half per cent :

 

Provided 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

           

(b)        to a unit holder of open-ended equity oriented funds in respect of any distribution made from such funds for a period of one year commencing from the 1st day of April, 2003.

 

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.]

 

(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.

 

89[R5] [(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 authority90[R6] , 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 prescribed90[R7] .]

 

(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).

 

Interest payable for non-payment of tax.

115S.   Where the person responsible for making payment of the income distributed by the 90a[R8]  [specified company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 200290b[R9] (58 of 2002)  or a Mutual Fund and the specified company] or the Mutual Fund, as the case may be, fails to pay the whole or any part of the tax referred to in sub-section (1) or sub-section (2) of section 115R, within the time allowed under sub-section (3) of that section, he or it shall be liable to pay simple interest at the rate of 91-92[R10] [one per cent] every month or part thereof on the amount of such tax for the period beginning on the date immediately after the last date on which such tax was payable and ending with the date on which the tax is actually paid.

 

Unit trust of India or mutual fund to be an assessee in default.

115T.   If any person responsible for making payment of the income distributed by the 90a[R11] [specified company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 200290b[R12]  (38 of 2002) or a Mutual Fund and the specified company] or the Mutual Fund, as the case may be, does not pay tax, as is referred to in sub-section (1) or sub-section (2) of section 115R, then, he or it shall be deemed to be an assessee in default in respect of the amount of tax payable by him or it and all the provisions of this Act for the collection and recovery of income-tax shall apply.

 

Explanation.— For the purposes of this Chapter,—

 

(a)        “Mutual Fund” means a Mutual Fund specified under clause (23D) of section 10;

           

(b)        “open-ended equity oriented fund” means—

           

(i)         the Unit Scheme, 1964 made by the Unit Trust of India; and

           

(ii)        such fund where the investible funds are invested by way of equity shares in domestic companies to the extent of more than fifty per cent of the total proceeds of such fund :

 

Provided that the percentage of equity share holding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures;

 

(c)        “Unit Trust of India” means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963).]

 

 

 [R1]Chapter XII-E, consisting of sections 115R to 115T, inserted by the Finance Act, 1999, w.e.f. 1-6-1999.

 [R2]Substituted for “any amount of income distributed by the Unit Trust of India to its unitholders” by the Finance Act, 2002, w.e.f. 1-4-2033.

 [R3]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.

 [R4]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.”

 [R5]Inserted by the Finance Act, 2000, w.e.f. 1-6-2000.

 [R6]See rule 12B and Form Nos. 63 & 63A.

 [R7]See rule 12B and Form Nos. 63 & 63A.

 [R8]Substituted for “Unit Trust of India or a Mutual Fund and the Unit Trust of India” by the Finance Act, 2003, w.e.f. 1-4-2003.

 [R9]For text of section 2(h), see  Direct Taxes Manual, Vol. 3

 [R10]Substituted for “one and one-fourth” by the Taxa­tion Laws (Amendment) Act, 2003, w.r.e.f. 8-9-2003. Earlier it was substituted by the Finance Act, 2001, w.e.f. 1-6-2001 and Finance Act, 2000, w.e.f. 1-6-2000

 [R11]Substituted for “Unit Trust of India or a Mutual Fund and the Unit Trust of India” by the Finance Act, 2003, w.e.f. 1-4-2003.

 [R12]For text of section 2(h), see  Direct Taxes Manual, Vol. 3