Skip to content

CMA Final · Direct Tax Laws and International Taxation · Assessment of Trusts

Mahalaxmi Securitisation Trust, a securitisation trust under section 221 of the Income-tax Act, 2025, earned ₹10,00,000 of interest in the tax year and credited only ₹6,00,000 to its investor Ramesh, who is entitled to all of the income. How much is taxable in Ramesh's hands for that tax year?

₹10,00,000 is taxable. Income of the securitisation trust that is not paid or credited is deemed credited to the investor on the last day of the tax year in the proportion of entitlement, so the whole accrued income is taxed in Ramesh's hands, not only the amount paid.

  1. A₹6,00,000
  2. B₹4,00,000
  3. C₹10,00,000Correct
  4. D₹16,00,000

Explanation

Income not paid or credited is deemed credited to the investor on the last day of the tax year in the proportion of entitlement. Ramesh is entitled to all of it, so ₹6,00,000 + ₹4,00,000 = ₹10,00,000 is taxable. Taxing only the ₹6,00,000 paid ignores the deemed credit.

Did you get it right without looking?

One question tells you little. A timed set on Assessment of Trusts shows your real accuracy, how long you take and where you lose marks.

Practise Assessment of TrustsFree diagnostic mock

More Assessment of Trusts questions