Pass-through taxation for business trusts ensures distributed income retains its original character in unit holders' hands. Income distributed by a business trust to unit holders is deemed to be of the same nature and proportion in the hands of the unit holder as it was received or accrued by the trust. The total income of a business trust is charged to tax at the maximum marginal rate. Distributed income falling within specified Schedule V categories is taxable as the unit holder's income in the tax year. The deeming rule excludes certain statutory sums and requires persons making payments on behalf of a trust to furnish prescribed statements detailing the nature of income paid.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Pass-through taxation for business trusts ensures distributed income retains its original character in unit holders' hands.
Income distributed by a business trust to unit holders is deemed to be of the same nature and proportion in the hands of the unit holder as it was received or accrued by the trust. The total income of a business trust is charged to tax at the maximum marginal rate. Distributed income falling within specified Schedule V categories is taxable as the unit holder's income in the tax year. The deeming rule excludes certain statutory sums and requires persons making payments on behalf of a trust to furnish prescribed statements detailing the nature of income paid.
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