Section 221 (was s.115TCA), Income-tax Act 2025 — Tax on income from securitisation trusts

Where this section sits

Section 221 is in Chapter XIII — Determination of Tax in Special Cases, which runs from section 190 to section 235.

What this section does

Sub-section (1) makes income an investor receives, or that accrues to him, out of investments in a securitisation trust chargeable as if the trust's investments had been made by him directly. Sub-section (2) preserves character and proportion — the income keeps in the investor's hands the nature it had in the trust's, in the same proportion. Sub-section (3) supplies a deeming date for undistributed income: anything accruing to or received by the trust in a tax year but not paid or credited to the investor is deemed credited to him on the last day of that tax year, in the proportion he would have been entitled to. Sub-section (4) puts a reporting duty on the trust and on the person responsible for crediting or paying the income — a prescribed statement of the nature of income paid or credited, furnished within a prescribed period both to the investor and to the prescribed income-tax authority. Sub-section (5) prevents double taxation when the income is actually paid later, and sub-section (6) defines "investor", "securities", "securitised debt instrument", "securitisation trust" and "security receipt" by reference to the sebi regulations, the Reserve Bank of India's guidelines on securitisation of standard assets and the sarfaesi Act, 2002.

Why it is there

It makes the securitisation trust a pass-through: the trust is not the taxpayer, the investor is, and he is taxed on the same character of income he would have had on a direct investment. The deemed credit on the last day of the tax year stops tax being deferred indefinitely by simply not distributing.

Who it applies to

An investor of a securitisation trust, being a holder of a securitised debt instrument, securities or a security receipt issued by the trust
A securitisation trust, being a special purpose distinct entity under the sebi Securitised Debt Instruments Regulations, a Special Purpose Vehicle under RBI guidelines, or a trust set up by a securitisation or reconstruction company under the sarfaesi Act
The person responsible for crediting or making payment of the income on behalf of the securitisation trust

The figures, and what each one turns on

Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.

What	Figure	The condition on it	Where
Deemed date of credit of undistributed trust income	The last day of the tax year	Applies to income accruing or arising to, or received by, the trust in the tax year that is not paid or credited to the investor; credited in the proportion he would have been entitled to receive	221(3)

What this means in practice

You are taxed on your share of the trust's income whether or not it reaches you, so undistributed income for a year is taxable in that year by force of sub-section (3). The character of the income follows through the trust — interest stays interest and capital gains stay capital gains — so you cannot report the whole distribution as one class. Rely on the sub-section (4) statement from the trust for the nature and proportion of the income, and when the cash arrives in a later year, do not offer it again: sub-section (5) excludes income already taxed on accrual.

An example

Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.

A securitisation trust earns interest of Rs. 20 crore in a tax year on the receivables it holds and distributes only Rs. 15 crore. An investor entitled to a tenth of the distributions is taxed on his Rs. 1.5 crore share of what was paid and also on Rs. 50 lakh, his proportion of the undistributed Rs. 5 crore, because sub-section (3) deems that credited to him on the last day of the tax year. It reaches him as interest rather than as some separate class of trust receipt, since sub-section (2) preserves the same nature and proportion the income had in the trust’s hands. When the trust actually pays that Rs. 5 crore out in a later year, sub-section (5) keeps it out of his total income for that later year, so it is not taxed twice.

Where you meet this section

In the investor’s own return and assessment, where the trust’s income has to be offered in its original character — the trust is not the taxpayer here. The document that brings it to him is the statement sub-section (4) requires the trust, and the person crediting or paying on its behalf, to furnish in the prescribed form within a prescribed period both to him and to the prescribed income-tax authority.

The words themselves

such income shall be chargeable to income-tax in the same manner as if it were the income accruing or arising to, or received by, such person, had the investments by the securitisation trust been made directly by him

Section 221(1), Income-tax Act, 2025.

What people get wrong

Taxing only what was distributed. Sub-section (3) deems the undistributed portion credited on the last day of the tax year.
Reporting distributions as a single class of receipt. Sub-section (2) requires the same nature and proportion as in the trust's hands.
Offering the income again when it is actually paid. Sub-section (5) removes it from total income of the year of actual payment.
Assuming any securitisation vehicle qualifies. Sub-section (6)(d) confines the term to the three regulated forms listed, and each must fulfil such conditions as may be prescribed.

What this replaced

The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.

115TCA - Tax on income from securitisation trusts

See the full 1961 to 2025 concordance.

Rules that serve this section

Rules of the Income-tax Rules, 2026 that work section 221. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.

Rule 145 — Statements under sections 221(4), 222(2), 223(5) and 224(9)

All of them are in the Rules 2026 index.

Notifications that reach this section

A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.

Notification No. 52 /2016 [F.No. 275/16/2016-IT(B)] — [To BE Published in the Gazette of INDIA, Extraordinary, Part II, section 3, Sub-section (ii)] 2016-06-23

See the notifications index.

What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.

Section 221 of the Income-tax Act, 2025