CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194F — Repurchase of Units by Mutual Fund or UTI (Omitted) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Omitted by the Finance (No.2) Act, 2024 with effect from 1 October 2024.
Finance Act, 2026: No amendment (the section had already been omitted with effect from 1 October 2024).
Mechanism: Historically, the payer on repurchase of section 80CCB units deducted tax on the deemed income under section 80CCB(2); no deduction obligation survives for repurchases on or after 1 October 2024.
Litigation profile: None. Omitted and unlitigated — the candour rule applies.
A. SECTION COMMENTARY
Section 194F obliged the person responsible for paying any amount referred to in clause (a) of sub-section (2) of section 80CCB — on account of the repurchase by a Mutual Fund or the Unit Trust of India of units acquired under an equity-linked savings scheme on which a section 80CCB deduction had been allowed — to deduct tax at the prescribed rate. It was the deduction counterpart of the deemed-income charge in section 80CCB(2) on such repurchase.
Omitted with effect from 1 October 2024
Section 194F was omitted by the Finance (No.2) Act, 2024 with effect from 1 October 2024, as part of the rationalisation of the TDS architecture. For any repurchase of units on or after that date there is no deduction obligation under section 194F. The omission does not affect the taxability of the gains themselves, which continue to be charged under the ordinary capital-gains/deemed-income provisions; it removes only the deduction mechanism.
A spent, now-omitted provision — candour
The provision was narrow and scheme-specific (section 80CCB units), and generated no body of judicial authority during its currency. In candour, there is no section 194F case law; the historic charge it collected lay in section 80CCB(2), and the consequences of any pre-omission default are governed by the general provisions of the Chapter.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194F. Omitted by the Finance (No. 2) Act, 2024, w.e.f. 1-10-2024.
C. AUTHORITIES
Candour rule strictly observed: section 194F is omitted (w.e.f. 1 October 2024) and was unlitigated. Only the statutory backdrop is offered.
Principle: Repurchase of section 80CCB units was deemed income in the year of repurchase; section 194F provided the deduction mechanism for that deemed income until its omission with effect from 1 October 2024.
Use: Explains the historic operation of the now-omitted provision.
Effect of omission
Principle: From 1 October 2024 no tax is to be deducted under section 194F; the omission is of the deduction mechanism only and does not exempt the underlying gains, which remain chargeable under the substantive provisions.
Use: States the current position for repurchases on or after the omission date.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.
CHAPTER XVII — COLLECTION AND RECOVERY OF TAX · B.—DEDUCTION AT SOURCE
Section 194F — Repurchase of Units by Mutual Fund or UTI (Omitted) (Tax Deducted at Source)
Case Laws & Commentary · Income-tax Act, 1961 (as amended by the Finance Act, 2026) · bharattax.co Treatise
Status: Omitted by the Finance (No.2) Act, 2024 with effect from 1 October 2024.
Finance Act, 2026: No amendment (the section had already been omitted with effect from 1 October 2024).
Mechanism: Historically, the payer on repurchase of section 80CCB units deducted tax on the deemed income under section 80CCB(2); no deduction obligation survives for repurchases on or after 1 October 2024.
Litigation profile: None. Omitted and unlitigated — the candour rule applies.
A. SECTION COMMENTARY
Section 194F obliged the person responsible for paying any amount referred to in clause (a) of sub-section (2) of section 80CCB — on account of the repurchase by a Mutual Fund or the Unit Trust of India of units acquired under an equity-linked savings scheme on which a section 80CCB deduction had been allowed — to deduct tax at the prescribed rate. It was the deduction counterpart of the deemed-income charge in section 80CCB(2) on such repurchase.
Omitted with effect from 1 October 2024
Section 194F was omitted by the Finance (No.2) Act, 2024 with effect from 1 October 2024, as part of the rationalisation of the TDS architecture. For any repurchase of units on or after that date there is no deduction obligation under section 194F. The omission does not affect the taxability of the gains themselves, which continue to be charged under the ordinary capital-gains/deemed-income provisions; it removes only the deduction mechanism.
A spent, now-omitted provision — candour
The provision was narrow and scheme-specific (section 80CCB units), and generated no body of judicial authority during its currency. In candour, there is no section 194F case law; the historic charge it collected lay in section 80CCB(2), and the consequences of any pre-omission default are governed by the general provisions of the Chapter.
B. STATUTORY POSITION (verbatim text)
Reproduced from the Income-tax Act, 1961 as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no amendment to this section). Editorial markers “***” denote text omitted by the Legislature.
194F. Omitted by the Finance (No. 2) Act, 2024, w.e.f. 1-10-2024.
C. AUTHORITIES
Candour rule strictly observed: section 194F is omitted (w.e.f. 1 October 2024) and was unlitigated. Only the statutory backdrop is offered.
No direct authority — statutory backdrop
Charge under section 80CCB(2) (historic)
Principle: Repurchase of section 80CCB units was deemed income in the year of repurchase; section 194F provided the deduction mechanism for that deemed income until its omission with effect from 1 October 2024.
Use: Explains the historic operation of the now-omitted provision.
Effect of omission
Principle: From 1 October 2024 no tax is to be deducted under section 194F; the omission is of the deduction mechanism only and does not exempt the underlying gains, which remain chargeable under the substantive provisions.
Use: States the current position for repurchases on or after the omission date.
Compiled for the bharattax.co Treatise on the Income-tax Act, 1961 (as amended by the Finance Act, 2026). Statutory text is reproduced verbatim from the bare Act; case-law citations have been web-verified. Where a section is new, narrow or substantially unlitigated, the candour rule is observed — the absence of direct authority is stated and only genuinely cognate authority is offered. This digest is for professional reference and is not a substitute for the official report of any judgment.