Section 115BBB taxed income from units of an open-ended equity oriented fund of the Unit Trust of India or of a Mutual Fund at ten per cent, with the rest of the total income taxed as if it were the total income. The expressions take their meanings from the Explanation to s. 115T.
Sub-section (2) provides that sub-section (1) does not apply to any such income arising after the 31st day of March, 2003.
Operative consequences
The ten per cent rate applied only to unit income that arose on or before 31 March 2003.
Unit income arising after that date is taxed under the other provisions of the Act.
Status
Section 115BBB remains on the statute book without an omission note but has no operation for income arising after 31 March 2003. It has no effect for AY 2026-27. The Finance Act, 2026 does not amend it.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is none.
Case Laws & Commentary
SECTION 115BBB — TAX ON INCOME FROM UNITS OF AN OPEN-ENDED EQUITY ORIENTED FUND OF THE UNIT TRUST OF INDIA OR OF MUTUAL FUNDS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BBB prescribes a special flat rate (ten per cent) on a person's income from units of an open-ended equity-oriented fund of the Unit Trust of India or of a Mutual Fund. Where the total income includes such income, the tax is the aggregate of (i) ten per cent on that income and (ii) tax on the balance income as if it were the total income. The provision was enacted in an era when income distributed by such funds enjoyed a particular treatment, and it ring-fenced the unit income at a concessional rate.
The practical field of section 115BBB has narrowed substantially: the reorganisation of the Unit Trust of India (the UTI Act repeal and the bifurcation into the specified undertaking and UTI Mutual Fund), the evolution of the mutual-fund distribution-tax regime, and the later changes to the taxation of mutual-fund unit income have left the section with limited current application. It is retained on the statute book and continues to govern any income that answers its precise description.
A.2 Sub-section / clause taxonomy
Single operative limb: aggregate of (i) income-tax at 10% on the income from units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund and (ii) income-tax on the balance income computed separately. Read with the definitions of 'Unit Trust of India', 'Mutual Fund' and 'equity-oriented fund' in the connected provisions.
A.3 Core doctrinal themes
Theme (1) - Concessional flat rate on qualifying unit income: the section fixes 10% on income from the specified open-ended equity-oriented fund units, decoupled from the slab system.
Theme (2) - Precise qualification: the income must be from units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund as defined; income outside that precise description is taxed under the ordinary provisions.
Theme (3) - Diminished field: successive reforms to UTI and mutual-fund taxation have largely overtaken the section, which is now of residual relevance.
Section 115BBB was inserted to give a defined concessional rate to income from the specified fund units. Its significance has been eroded by the repeal of the Unit Trust of India Act and the reorganisation of the UTI, and by the subsequent changes to the taxation of mutual-fund unit income and distributions. It remains on the statute book without having been omitted.
Finance Act 2026: no amendment to section 115BBB. The provision continues, with its narrow field, for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) Apply section 115BBB only where the income answers its precise description (units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund). (2) Check whether the current mutual-fund taxation provisions (and the equity-oriented-fund definitions) govern the receipt instead, given the section's diminished field. (3) Where applicable, tax the qualifying income at 10% and the balance income separately.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BBB is NOT amended by the Finance Act, 2026. The concessional 10% rate on income from the specified open-ended equity-oriented fund units continues, with its narrow practical field, for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Candid note on the case-law field: Section 115BBB addresses a narrow and now largely overtaken category of income and has effectively no dedicated reported case-law field; its application turns on the precise statutory description of the fund and unit and on the interaction with the evolving mutual-fund taxation regime. Consistent with the accuracy discipline of this treatise, no case is cited under this section rather than attaching off-point authority; the position is stated candidly.
D. PRACTITIONER'S NOTE
Treat section 115BBB as a narrow, residual rate provision: confirm that the income precisely matches its description before applying the 10% rate, and check whether the current mutual-fund taxation provisions govern the receipt instead. In most contemporary fact-patterns the unit income is taxed under the general provisions rather than under this diminished section.
E. SOURCES & CITATIONS
Section 115BBB is not amended by the Finance Act, 2026.
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The mutual-fund and UTI taxation framework has changed materially over time; verify the current statutory text, the relevant definitions and the latest CBDT/appellate position before relying on any proposition.
Function in the statutory architecture
Section 115BBB taxed income from units of an open-ended equity oriented fund of the Unit Trust of India or of a Mutual Fund at ten per cent, with the rest of the total income taxed as if it were the total income. The expressions take their meanings from the Explanation to s. 115T.
Sub-section (2) provides that sub-section (1) does not apply to any such income arising after the 31st day of March, 2003.
Operative consequences
Status
Section 115BBB remains on the statute book without an omission note but has no operation for income arising after 31 March 2003. It has no effect for AY 2026-27. The Finance Act, 2026 does not amend it.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is none.
Case Laws & Commentary
SECTION 115BBB — TAX ON INCOME FROM UNITS OF AN OPEN-ENDED EQUITY ORIENTED FUND OF THE UNIT TRUST OF INDIA OR OF MUTUAL FUNDS
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BBB prescribes a special flat rate (ten per cent) on a person's income from units of an open-ended equity-oriented fund of the Unit Trust of India or of a Mutual Fund. Where the total income includes such income, the tax is the aggregate of (i) ten per cent on that income and (ii) tax on the balance income as if it were the total income. The provision was enacted in an era when income distributed by such funds enjoyed a particular treatment, and it ring-fenced the unit income at a concessional rate.
The practical field of section 115BBB has narrowed substantially: the reorganisation of the Unit Trust of India (the UTI Act repeal and the bifurcation into the specified undertaking and UTI Mutual Fund), the evolution of the mutual-fund distribution-tax regime, and the later changes to the taxation of mutual-fund unit income have left the section with limited current application. It is retained on the statute book and continues to govern any income that answers its precise description.
A.2 Sub-section / clause taxonomy
Single operative limb: aggregate of (i) income-tax at 10% on the income from units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund and (ii) income-tax on the balance income computed separately. Read with the definitions of 'Unit Trust of India', 'Mutual Fund' and 'equity-oriented fund' in the connected provisions.
A.3 Core doctrinal themes
Theme (1) - Concessional flat rate on qualifying unit income: the section fixes 10% on income from the specified open-ended equity-oriented fund units, decoupled from the slab system.
Theme (2) - Precise qualification: the income must be from units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund as defined; income outside that precise description is taxed under the ordinary provisions.
Theme (3) - Diminished field: successive reforms to UTI and mutual-fund taxation have largely overtaken the section, which is now of residual relevance.
A.4 Legislative evolution / Finance Act amendment trail
Section 115BBB was inserted to give a defined concessional rate to income from the specified fund units. Its significance has been eroded by the repeal of the Unit Trust of India Act and the reorganisation of the UTI, and by the subsequent changes to the taxation of mutual-fund unit income and distributions. It remains on the statute book without having been omitted.
Finance Act 2026: no amendment to section 115BBB. The provision continues, with its narrow field, for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) Apply section 115BBB only where the income answers its precise description (units of an open-ended equity-oriented fund of the UTI or of a Mutual Fund). (2) Check whether the current mutual-fund taxation provisions (and the equity-oriented-fund definitions) govern the receipt instead, given the section's diminished field. (3) Where applicable, tax the qualifying income at 10% and the balance income separately.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BBB is NOT amended by the Finance Act, 2026. The concessional 10% rate on income from the specified open-ended equity-oriented fund units continues, with its narrow practical field, for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Candid note on the case-law field: Section 115BBB addresses a narrow and now largely overtaken category of income and has effectively no dedicated reported case-law field; its application turns on the precise statutory description of the fund and unit and on the interaction with the evolving mutual-fund taxation regime. Consistent with the accuracy discipline of this treatise, no case is cited under this section rather than attaching off-point authority; the position is stated candidly.
D. PRACTITIONER'S NOTE
Treat section 115BBB as a narrow, residual rate provision: confirm that the income precisely matches its description before applying the 10% rate, and check whether the current mutual-fund taxation provisions govern the receipt instead. In most contemporary fact-patterns the unit income is taxed under the general provisions rather than under this diminished section.
E. SOURCES & CITATIONS
Section 115BBB is not amended by the Finance Act, 2026.
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The mutual-fund and UTI taxation framework has changed materially over time; verify the current statutory text, the relevant definitions and the latest CBDT/appellate position before relying on any proposition.