The Unit Trust of India Act,1963
Section 32. Income-tax and other taxes
(1) Notwithstanding anything contained in the income-tax Act,1961, (43 of 1961) the Super Profits Tax Act,1963, (14 of 1963) or in any other enactment for the time being in force relating to income-tax, super-tax or super profits tax, or any other tax on income, profits or gains–
(a) The Trust shall not be liable to pay income-tax, super-tax, super profits tax or any other tax in respect of any income, profits or gains derived by it from any source;
(b) Where the income received by a unit holder, being an individual, from the Trust in respect of units does not exceeds one thousand rupees, such income, and where such income exceeds one thousand rupees, a sum of one thousand rupees, shall be excluded in computing the total income of the unit holder for purposes of income-tax and in the case of any such unit holder who would not be liable to super-tax but for the inclusion of such income in his total income, also for purposes of super-tax; and
(c) Where a contributing institution is liable to be assessed to super profits tax under the Super Profits Tax Act,1963, (14 of 1963) in respect of its own income, profits or gains and receives any sum from the Trust under this Act in respect of its contribution to the initial capital, such sum as reduced by the amount of any income-tax and super-tax payable in respect thereof shall be excluded from the total income of the said institution in computing its chargeable profits for the purposes of super profits tax.
(2) Notwithstanding anything contained in section 193 or section 194 of the Income-tax Act,1961(43 of 1961)–
(a) No deduction of income-tax or super-tax shall be made on any interest or dividend payable to the Trust in respect of any securities or shares owned by it or in which it has full beneficial interest; and
(b) No deduction of income-tax shall be made by the Trust from the income distributed by it to a unit holder being an individual.
(3) Subject to the foregoing sub-sections, for the purposes of the Income-tax Act,1961, (43 of 1961)–
(a) Any distribution of income received by a unit holder from the Trust shall be deemed to be his income by way of dividends; and
(b) The Trust shall be deemed to be a company.