Investment fund pass-through taxation treats unit holders as direct investors, restricts loss attribution and deems undistributed income credited proportionately.

Investment fund income attributable to unit holders is taxed under Section 224 of the Income-Tax Act, 2025, as if they had made the underlying investments directly, continuing the approach described under Section 115UB of the Income-Tax Act, 1961. Income paid or credited retains the nature and proportion it had in the fund's hands. Non-business losses relating to units held for less than twelve months are also excluded from pass-through. Income already included in a unit holder's total income on accrual is not included again when actually paid.

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