Investment-fund unit income withholding requires deduction on taxable distributions to eligible non-resident holders, excluding the exempt income component.

Withholding tax applies to taxable income from units of an Investment Fund specified in section 224 when paid or credited to a non-resident unit holder, other than a company, or a foreign company. The Investment Fund must deduct tax at the rates in force at the earlier of credit or payment. No threshold limit applies. The withholding obligation is confined to the taxable component of distributed income and excludes the proportion exempt under Schedule V (Table: Sl. No. 2).

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