Skip to content

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

Under the Income-tax Act, 2025, which statement about the nature of income paid or credited by a securitisation trust to an investor is correct?

Income paid or credited by a securitisation trust is deemed to be of the same nature and in the same proportion in the investor's hands as it was received by the trust. The investor is taxed as if the investments had been made directly.

  1. AIt is always treated as income from other sources, whatever its source in the trust
  2. BIt is treated as capital gains in the investor's hands
  3. CIt is deemed to be of the same nature and in the same proportion as received by the trustCorrect
  4. DIt is exempt in the investor's hands if the trust has paid tax

Explanation

Section 221(2) provides that income paid or credited by the securitisation trust is deemed to be of the same nature and in the same proportion in the investor's hands as it was in the trust's. Pass-through treatment applies, so a fixed head is wrong.

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