CBDT Introduces New Compliance Rules for Business Trusts and Investment Funds

CBDT New Compliance Rules for Business Trusts and Investment Funds: Tax Reporting Made Tougher and Transparency Governance Improved.

New compliance regulations for the business trust and investment fund have been framed by the Central Board of Directors on October 30. This is aimed at tightening tax compliance and elevating governance for financial data reporting.

As per the new rules, business trusts must now furnish, by way of a statement, the income distributed to investors to the CIT by June 15 as opposed to the previous deadline of November 30. Under the new reporting form, particularly Form 64A for business trusts, specified disclosure is obliged on account of dividend income received from companies having the option of a lower tax rate alongside income from VCCs.

The amendments also bring changes for investment funds in Forms 64C and 64D concerning the current capital gains tax rates. Preparation of electronic filing of a consolidated income statement must be ensured and forms for furnishing data to the unitholders will be generated automatically. The changes will affect the way REITs, InvITs, AIFs, and ARC Trusts report and highlight the need for strong compliance and governance frameworks to ensure accurate tax reporting and transparency concerning business trusts and investment funds.