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In the last part of our TDS series, we will discuss in detail Section 194 L series which majorly focus upon those type of income occurrence of which is not very frequent (or rather we’d say pretty uncommon).
But nonetheless, having a brief idea about all these sections is required. So let’s start our last leg of the TDS series by having a brief overview of all the sections we will touch upon. These Sections include TDS on-

Section 194LA: TDS on Payment of Compensation on Acquisition of Certain Immovable Property

Who has the need to deduct TDS u/s 194LA?

Any person who pays to a resident a sum (being consideration/ compensation or enhanced consideration/ compensation) on compulsory acquisition of any immovable property (other than agriculture land) is required to deduct tax at source.

What is the rate & time of tax deduction u/s 194LA?

The rate of tax u/s 194LA is 10%. The time of deduction is at the time of payment of such sum.

No requirement of TDS in the following cases :
  • When the amount (at once or in total for the whole financial year) does not exceed ?250000.
  • When any payment is made u/s 96 of the Right to Fair Compensation and Transparency in Land, Acquisition, Rehabilitation and Resettlement Act, 2013.

Section 194LB: TDS on Income by way of Interest from Infrastructure Debt Fund

Who has the need to deduct TDS u/s 194LB?

Any person who makes payment of interest [which is payable by an infrastructure debt fund, as per section 10(47)] to a non-resident (not a company/ foreign company) is required to deduct tax at source.

What is the rate & time of tax deduction u/s 194LB?

The rate of tax u/s 194LB is 5%.( EC & SHEC also applicable) The time of deduction is at the time of payment of such sum.


Section 194LBA: TDS on Certain Income from Units of a Business Trust

Who has the need to deduct TDS u/s 194LBA?

Any person who makes payment of income [as per section 115UA] which is payable by a business trust to its unitholder is required to deduct tax at source. Such unit holder can be a resident, non-resident (but not a company).

What is the rate & time of tax deduction u/s 194LBA?

The rate of tax u/s 194LBA is 10% (if the payee is resident) and 5% (if the payee is non-resident).
The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).


Section 194LBB: TDS on Income in Respect of Units of Investment Fund

Who has the need to deduct TDS u/s 194LBB?

Any person who gives an income (as referred u/s 115UB) to a unitholder in respect of units held in an investment trust has to deduct tax under this section.

What is the rate & time of tax deduction u/s 194LBB?

The rate of tax u/s 194LBB is 10% (if the payee is resident) and if the payee is non-resident (not a company) or a foreign company then tax will be as per the rates in force during FY.
The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).


Section 194LBC: TDS on Income in Respect of Investment in Securitisation Trust

Who has the need to deduct TDS u/s 194LBC?

Any person who gives income to an investor with respect to investment in securitization trust is required to deduct tax under this section.

What is the rate & time of tax deduction u/s 194LBC?

The rate of tax u/s 194LBC is:

  • 25% (if the payee is resident Individual & HUF)
  • 30% (if the payee is another person)
  • At the rates in force [if the payee is non-resident (not being a company) or foreign company].

The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).


Section 194LC: TDS on Income by way of Interest from Indian Company or Business trust

Who has the need to deduct TDS u/s 194LC?

If an Indian company or a business trust pays income by way of interest to non-resident (not being a company) or foreign company, has to deduct TDS under this section.

Interest on which TDS is to be deducted

The Interest must be in respect of money borrowed by the specified company or business trust from a source outside India by the way of issue of rupee-denominated bond.

What is the rate & time of tax deduction u/s 194LC?

The rate of tax u/s 194LC is 5% (plus Health & Education Cess @ 4%). The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).


Section 194LD: TDS on Income by way of Interest on Certain Bonds and Government Securities

Who has the need to deduct TDS u/s 194LD?

If any person pays to FII (Foreign Institutional Investor) or QFB (Qualified Foreign Investor) income by way of interest has to deduct tax at source.

Interest on which TDS is to be deducted

Interest must be in respect of investment made by the payee in a rupee-denominated bond of Indian Company or a government security.

What is the rate & time of tax deduction u/s 194LD?

The rate of tax u/s 194LD is 5% (plus Health & Education Cess @ 4%). The time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or another mode).


CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.