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Section 115TCA of Income Tax Act 1961: Tax on Income from Securitisation Trusts

Updated for the law applicable from 1 April 2026

Section 115TCA of the Income-tax Act, 1961 contained the pass-through taxation rule for income arising to investors from a securitisation trust. From 1 April 2026, the Income-tax Act, 2025 replaced the Income-tax Act, 1961, and the corresponding provision is now contained in Section 221 of the Income-tax Act, 2025.

Current-law note: Section 115TCA is a legacy provision of the Income-tax Act, 1961. For tax years governed by the Income-tax Act, 2025 from 1 April 2026, refer to Section 221 and the Income-tax Rules, 2026. This page retains Section 115TCA because it remains relevant for understanding the earlier law, historical proceedings and the transition to the new Act.
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Meaning and Purpose of Section 115TCA

Section 115TCA was introduced to provide a pass-through method of taxation for specified securitisation trusts. In substance, income from the underlying investments is taxed in the hands of the investor as though the investor had made those investments directly.

Core principle: the character of the income is preserved when it passes through the securitisation trust. The investor is taxed according to the nature and proportion of the income attributable to that investor, subject to the other applicable provisions of the tax law.
Point Section 115TCA position
Person taxed The investor of the securitisation trust.
Tax treatment Income is taxed as if the underlying investment had been made directly by the investor.
Nature of income The nature and proportion of the trust income are carried through to the investor.
Undistributed income Income not paid or credited during the previous year is deemed credited on the last day of that previous year in the relevant proportion.
Double taxation safeguard Income already taxed on accrual is not included again when it is actually paid.

How Section 115TCA Worked

Sub-section (1): taxation in the hands of the investor

Income accruing, arising or received by an investor from investments made through a securitisation trust is chargeable to tax in the same manner as if the investor had made the investments directly. The provision therefore looks through the trust for this purpose.

Sub-section (2): nature and proportion of income

Income paid or credited by the securitisation trust keeps the same nature and proportion in the hands of the investor as it had in the hands of the securitisation trust.

Sub-section (3): deemed credit of undistributed income

If income arises to or is received by the securitisation trust during a previous year but is not paid or credited to the investor, the investor's proportionate share is deemed to have been credited on the last day of that previous year.

Sub-section (4): prescribed statements

The person responsible for payment or credit on behalf of the securitisation trust, and the securitisation trust, must furnish the prescribed statement to the investor liable to tax and to the prescribed income-tax authority, containing the required particulars of the income.

Sub-section (5): prevention of double inclusion

Where income has already been included in the investor's total income because it accrued or arose in an earlier previous year, the same income is not included again in the year in which it is actually paid by the securitisation trust.

Important Definitions Under the Legacy Provision

The Explanation to Section 115TCA defined the principal expressions used for the securitisation trust regime.

Investor

An investor was a person holding a securitised debt instrument, securities or a security receipt issued by the securitisation trust.

Securities

For this Chapter, securities referred to debt securities issued by a Special Purpose Vehicle of the kind referred to in the applicable securitisation framework.

Securitised debt instrument

The expression took its meaning from the regulatory definition referred to in the Securities and Exchange Board of India framework governing public offer and listing of securitised debt instruments.

Securitisation trust

The expression covered the prescribed categories of securitisation vehicles, including specified special purpose entities or vehicles and qualifying trusts established by securitisation or reconstruction companies under the SARFAESI framework, subject to the statutory conditions.

Security receipt

The expression followed the meaning assigned under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Current Law From 1 April 2026: Section 221 of the Income-tax Act, 2025

The Income-tax Act, 2025 came into force on 1 April 2026. The corresponding current provision for tax on income from securitisation trusts is Section 221. It continues the central pass-through approach: qualifying income is taxable in the investor's hands as if the investor had made the underlying investment directly.

Section 221 also preserves the rules dealing with the nature and proportion of income, deemed credit of income not actually distributed, prescribed reporting, prevention of double inclusion and the relevant definitions. Accordingly, users dealing with current tax years should read Section 221 rather than relying only on the old Section 115TCA numbering.

Practical reading rule: use Section 115TCA when examining the historical Income-tax Act, 1961 position and proceedings governed by that law. For the regime in force from 1 April 2026, check Section 221 of the Income-tax Act, 2025 together with the Income-tax Rules, 2026 and the current forms.

Statements and Compliance

Under the earlier Income-tax Rules, 1962 framework, Rule 12CC prescribed reporting under Section 115TCA, including Form 64E for the statement to the income-tax authority and Form 64F for the statement provided to the investor.

From 1 April 2026, the Income-tax Rules, 2026 apply. The Income Tax Department's current forms guidance maps the earlier Section 115TCA compliance to Section 221 of the Income-tax Act, 2025 and to the corresponding forms under the 2026 Rules. Taxpayers and securitisation trusts should therefore use the current form and rule applicable to the relevant tax year rather than an obsolete form merely because it appears in an older document.

For the older Income-tax Act, 1961 framework, the following internal pages provide useful context around the neighbouring securitisation trust and special-tax provisions:

Official References

For authoritative and current text, use the Income Tax Department resources linked below. The current Act and Rules should be checked for the tax year involved.

This article is intended as a legal and tax information resource. The applicable Act, Rules, notifications and official forms should be verified for the relevant tax year and facts.