Section 115TCA – Tax on income from Securitisation Trust – Tax Treatment in respect of distributions in April and May 2016 may be clarified

Issue/Justification

The Finance Act, 2016 inserted section 115TCA to provide for transition of securitisation trusts from distribution tax regime to complete pass through regime (with TDS on distributions). However, the cut-off date between old and new regime is not clear. Distribution Tax applies for distributions upto 31 May 2016 whereas new regime for complete-pass through (with TDS) applies from A.Y. 2017-18. This raises ambiguity on whether distributions made between April, 2016 to May, 2016 are covered under old regime or new regime.

Suggestion

It is suggested that the new regime (section 115TCA) may be made applicable for distributions on or after 1st June 2016.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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