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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Nature of Business

Under section 223(5) of the Income-tax Act, 2025, what must the person responsible for paying income distributed on behalf of a business trust do?

The payer must furnish a statement to both the unit holder and the prescribed authority, giving details of the nature of income paid during the tax year and other prescribed details, within the prescribed time, form and manner, as section 223(5) requires.

  1. ADeduct tax at the maximum marginal rate and keep no record
  2. BFurnish a statement giving details of the nature of income paid during the tax year to the unit holder and the prescribed authorityCorrect
  3. CFile the statement only with the unit holder, not the authority
  4. DPublish the details in a newspaper

Explanation

Section 223(5) requires the person making payment on behalf of the trust to furnish a statement to both the unit holder and the prescribed authority. It gives the nature of income paid in the tax year and other prescribed details, within the prescribed time, form and manner. Furnishing to the unit holder alone is incomplete.

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