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of <h1>Income Tax Bill 2025 Clause 393(2) raises offshore fund capital gains TDS to 12.5%</h1> The Income Tax Bill 2025's Clause 393(2) introduces updated tax deduction at source provisions for offshore fund investments, replacing Section 196B of the Income-tax Act 1961. The new provisions maintain a 10% TDS rate on income from specified units but increase the rate on long-term capital gains from unit transfers to 12.5%. Key changes include explicit segregation of income types in tabular format, removal of date-specific rate transitions, and integration into a comprehensive TDS framework. While preserving core principles of attracting foreign investment, the legislation reflects recent policy shifts toward higher tax collection from offshore funds. Payers must identify offshore fund payees and apply correct rates without threshold exemptions, while funds face increased compliance costs on capital gains.
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