No tax on redemptions and bonus units, CBDT clarifies

Tax authorities were demanding AMCs to pay tax on redemptions and on issue of bonus units.

In a relief to fund houses and investors, the Central Board of Direct Taxes (CBDT) has clarified that AMCs won’t have to pay any tax on redemptions and on issue of bonus units.

Tax authorities were demanding AMCs to pay additional income tax under sub-section (2) to section 115R of the Income Tax Act on payment made to investors at the time of redemptions and issue of bonus units to investors.