Distribution & Taxation
Tax deduction at source (TDS) on Distribution 2027 Q2
Income tax will be deducted as per the provisions of section 393 of Income-tax Act, 2025 ('the Act') (Erstwhile section 194LBA of the Income-tax Act, 1961 ('the Old Act')) by Mindspace Business Parks REIT ('MREIT') on distribution to its Unitholders. As it is important for MREIT to receive the relevant information from Unitholders to determine the rate of tax deduction on Distribution, we have sent out communications to Unitholders as per the classification given below (please click below hyperlink for details):
No TDS shall be deducted on distribution in the form of dividend as none of the Special Purpose Vehicles of MREIT have opted for the beneficial tax regime under section 200 of the Act (Erstwhile section 115BAA of the Old Act). No TDS is deductible on other distribution.
However, TDS shall be deducted on distribution in the form of interest as per the provisions of section 393(1) [Table: S.No. 4(ii)] and 393(2) [Table: S.No. 6] of the Act in case of resident and non-resident unitholders respectively (Erstwhile section 194LBA of the Old Act).
The category-wise applicable rate of TDS on distribution in the form of interest for financial year 2026-27 is summarised in table below:
| Category of Unitholder (Residents) | Withholding Tax Rate |
|---|---|
| Individuals | 10% |
| Exempt Categories: | |
|---|---|
Alternate Investment Fund – Category I & II Central Government vide CBDT notification No.51/2015 dated 25th June 2015 has granted TDS exemption on all incomes other than business profits received by Category I and II AIFs | NIL (subject to registration certificate / notification as AIF Category I or II) |
Mutual Fund As per section 393(5) of the Income-tax Act (Erstwhile section 196 of the Old Act), TDS is not required to be deducted on interest payment on securities owned by mutual funds specified under section 11(3) read with Schedule VII (Table: Sl. No. 20 or 21), of the Act (Erstwhile section 10(23D) of the Old Act). | NIL (subject to registration certificate from SEBI or RBI or other relevant authority) |
The rate of TDS for Non-Resident Unitholders is 5% (plus applicable surcharge and cess) as per the Act. Surcharge rate varies depending upon the category of Non-Resident Unitholder and the taxable income for the relevant financial year (i.e. FY 2025-26).
| Category of Unitholder (including FPIs and FIIs) | Taxable Income of the Non-Resident Unitholder | Effective Withholding Tax Rate (including surcharge and cess) |
|---|---|---|
| Individuals, Trusts, Body of individuals, Association of persons |
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Disclaimer
The information provided in this document sets out the withholding tax applicable to the Unitholders on distributions for financial year 2025-26 in a summary manner only and is not a complete analysis of tax implications arising in the hands of the Unitholders. It is not exhaustive or comprehensive and does not and should not be deemed to constitute legal, financial or tax advice. Investors are advised to consult their own consultants with respect to the tax implications/consequences.
For any further tax related questions, an e-mail can be sent to the following e-mail address reitcompliance@mindspacereit.com.
