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

Which statement about the section 223(1) pass-through rule and the sums referred to in section 92(2)(k) is correct under the Income-tax Act, 2025?

Section 223(1) does not apply to a sum referred to in section 92(2)(k) received by a unit holder from a business trust. Section 223(4) carves these sums out of the pass-through rule, regardless of the type of unit holder.

  1. ASection 223(1) does not apply to any sum referred to in section 92(2)(k) received by a unit holder from a business trustCorrect
  2. BSection 223(1) applies to every sum received, including those in section 92(2)(k), without exception
  3. CSums in section 92(2)(k) are taxed only in the hands of the trust
  4. DSection 223(1) applies to those sums only if the unit holder is a company

Explanation

Section 223(4) states that sub-section (1) shall not apply to any sum referred to in section 92(2)(k) received by a unit holder from a business trust. So the deemed same-nature rule is excluded for those sums. The other options contradict this carve-out.

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