NEW TAXATION REGIME FOR SECURITISATION TRUST AND ITS INVESTORS

NEW TAXATION REGIME FOR SECURITISATION TRUST AND ITS INVESTORS

Sections 115TA to 115TC lay down a special taxation regime for in respect of income of securitisation trusts and its investors.

It is proposed to make the following amendments in the current tax regime:-

– The new regime shall apply to securitisation trust being an SPV defined as per regulations of SEBI or SPV as defined in the guidelines on securitisation of standard assets issued by RBI or securitisation or reconstruction company in accordance with SARFAESI Act

– Any income received by investor from securitisation trust shall be taxable. Further, income accrued or received by securitisation trust shall be taxable in the hands of investors in the same manner and extent assuming the investment in the underlying asset is made directly by the investor and not through trust. Further, if income is not paid on the last day of the previous year by the trust to the investors, it shall be deemed to be paid in the same proportion in which investor would have been entitled to receive the income had it been paid in the previous year.

– Any income, included in the hands of investors, on account of accrual or arisen in a previous year, shall not be charged to tax inthe year when the securitisation trust actually pays to the investor

– The rates for tax deduction at source by securitisation trust shall be as follows:-

Type of Investor Rate of TDS
Resident Individual and Resident HUF 25%
Resident person other than individual and HUF 30%
Non resident investors Rates in force

The facility to obtain low or nil deduction of tax certificate shall be available for the investors

The trust shall provide breakup regarding nature and proportion of its income to the investors and also to the prescribed income-tax authority

The current regime of distribution tax shall cease to apply in case of distributions made by securitisation trusts with effect from 01.06.2016

These amendments will take effect from 1st June, 2016

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