§ 223
Chapter XIII — Determination Of Tax In Special Cases
Tax on income of unit holder and business trust
Income-tax Act, 2025
Business trusts must distribute income to unit holders, who are then taxed on that income as if they had earned it directly. The total income of a business trust is taxed at the maximum marginal rate. Unit holders are taxed on distributed income that falls under certain categories, such as those listed in Schedule V. The tax applies to income distributed, except for certain sums received under section 92(2)(k). Key points to note include:
- taxation of distributed income at the unit holder level
- maximum marginal tax rate for business trusts
📜 Official text of the section +
223. (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.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.