Page 38 - Union Budget_2019

Union Budget 2019

• Losses, other than business loss, can be passed through to the unit holder provided the unit

holder has held the unit for at least 12 months
• Accumulated losses, other than business losses, of the AIF as on 31 March 2019 shall be
st
deemed to be the loss of unit holders as on 31 March 2019 in respect of his investment in AIF
st
and shall be allowed to carry forward and set off by the unit holder for the remaining period,
from the period beginning from the year in which loss had occurred for the first time
• Losses so deemed shall not be available to the AIF for carry forward and set-off.

These amendments will take effect from the 1st April, 2020 and will, accordingly, apply in relation to the

assessment year 2020-21 and subsequent assessment years.

8.3 Rationalisation of Provisions of Dividend Distribution Tax (DDT)

Section 115-O provides for distribution tax in case of distribution of profits by a company. Further, it
exempts the unit in an IFSC from the ambit of DDT subject to specified conditions if the distribution is made

out of current income of that unit in IFSC and no taxable in the hands of recipient on account of distribution
made by unit in IFSC.

It is proposed to amend the provision of the Section 115-O to provide that, any dividend paid by a unit in
IFSC, out of accumulated income derived from operations in IFSC, after 1st April 2017 shall additionally not
be liable for tax on distributed profits. Thus, any distribution of dividend out of current as well as

accumulated income shall be exempt from tax, in the hands of unit in IFSC as well as recipient.

This amendment will take effect from 1st September, 2019.

8.4 No DDT for Mutual Funds in IFSC

Section 115R levies additional income tax at the rate of 10% in the hands of the specified companies or
mutual funds upon distribution of any income to the unit holders.

It is proposed to amend the said section so as to provide that no additional income-tax shall be chargeable

in respect of any amount of income distributed, on or after the 1st day of September, 2019, out of income
derived from transaction on recognised stock exchange by a Mutual Fund located in IFSC of which all the

unit holders are non-residents and deriving its income solely in convertible foreign exchange, subject to
specified conditions.

This amendment will take effect, from 1st September, 2019.

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