The 60-second version
Section 196E requires 5% TDS on income from units of Infrastructure Debt Fund — IDF trust deducts at payout; resident unit-holders declare in ITR with TDS credit.
196E is IDF unit income — 194LBA is REIT lane
Section 196E applies when an Infrastructure Debt Fund pays income to a unit-holder — 5% TDS deducted by IDF trust at distribution.
Returning NRIs holding IDF units must redesignate demat KYC to resident before next payout — else higher NRI TDS rate may apply.
REIT lane: Section 194LBA guide for real estate investment trust distributions at 10%.
Infrastructure income TDS matrix
| Section | Rate | Instrument |
|---|---|---|
| 196E | 5% | IDF unit income |
| 194LBA | 10% | REIT distribution |
| 194LB | 10% | InvIT distribution |
| 196A | 20% | MF redemption (NRI) |
196E sequence
KYC resident
Update demat folio.
Distribution
IDF declares payout.
5% TDS
Trust deducts under 196E.
26AS
Verify trust TAN credit.
ITR
Declare IDF income.
Flow
196E kit
- Distribution stmt.
- TDS cert.
- 26AS.
- PAN.
- ITR ACK.
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NRI folio
Redesignate demat KYC to resident before next distribution — else NRI TDS rate may apply on unit-holder leg.
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0 of 4 checked
vs 194LBA?
196E IDF units at 5%; 194LBA REIT distribution at 10%.
Capital gains on units?
Section 112A if listed — separate from distribution TDS.
RNOR?
Indian IDF income taxed from resident date.
Form 15G?
If total income below exemption before IDF credit.
Foreign IDF?
Schedule FA — not 196E chain.
TDS refund?
Claim in ITR if tax due below TDS.
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