Section 194F of the Income-tax Act, which mandates a 20% TDS on payments made for repurchase of units by Mutual Funds or Unit Trusts of India (UTI), is set to be eliminated. The Finance Bill 2024 includes Clause 55 proposing the omission of this section. Currently, under section 194F, any person responsible for paying amounts specified in sub-section (2) of section 80CCB must deduct income tax at a rate of 20% at the time of payment. This amendment aims to remove this TDS requirement entirely. Effective from October 1, 2024, the proposed change is poised to simplify tax procedures related to mutual fund investments, potentially easing compliance burdens for stakeholders involved in unit repurchases.
Budget 2024: Section 194F – TDS on payments on repurchase of units by mutual fund or UTI
It is proposed to omit section 194F relating to TDS on payments on repurchase of units by Mutual Fund or UTI which attracts a TDS rate of 20%.
2. The amendment will take effect from 1st day of October 2024.
[Clause 55]
Extract of Clause 55 of Finance Bill 2024
Clause 55 of the Bill seeks to omit section 194F of the Income-tax Act relating to payments on account of repurchase of units by Mutual Fund or Unit Trust of India.
The said section provides that the person responsible for paying to any person any amount referred to in sub-section (2) of section 80CCB shall, at the time of payment thereof, deduct income-tax thereon at the rate of twenty per cent.
It is proposed to omit the said section 194F.
This amendment will take effect from 1st October, 2024.
Omission of section 194F.
Section 194F of the Income-tax Act shall be omitted with effect from the 1st day of October, 2024.
