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THE UNIT TRUST OF INDIA ACT, 1963

Title : THE UNIT TRUST OF INDIA ACT, 1963

Year : 1963



In the discharge of its functions under this Act, the Trust shall be guided by such directions in matters of policy involving public interest as the 1*[Development Bank] may give to it in writing, and if any question arises whether the direction relates to a matter of policy involving public interest, the decision of Reserve Bank thereon shall be final.

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1. Substituted by Act 52 of 1975, Section 55 (w.e.f. 16th February, 1976).

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(1) The Trust may appoint such number of officers and other employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment and service.

(2) Without prejudice to the provisions of sub-section (1), it shall be lawful for the Trust to utilize, and for the Reserve Bank to make available the services of such staff of the Reserve Bank on such terms and conditions as may be agreed upon between the Trust and the Reserve Bank.

1*[(3) Every member of the staff of the Reserve Bank,-

(a) Whose services are being, immediately before the notified date, being utilized by the Trust under sub-section (2), or

(b) Whose services having been made available to the Trust, stand, immediately before the notified date, deputed by the Trust to any other organisation,shall, on and from the notified date, be deemed to be appointed by the Trust under sub-section (1) on the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the notified date:

Provided that every member of the staff aforesaid may, before the expiry of a period of eighteen months from the notified date, elect to go back to the Reserve Bank by exercising an option in writing to that effect, the option once exercised being final, and on the exercise of such option, the Reserve Bank shall, before the expiration of a period of thirty months from the notified date, take back such member of the staff and on such member being taken back by the Reserve Bank, he shall become a member of the staff of the Reserve Bank and shall cease to be a member of the staff of the Trust.

(4) Notwithstanding anything contained elsewhere in this Act or in any other law or in any contract, for the time being in force, for a temporary period, not being a period exceeding eighteen months from the notified date or the date of commencement of Sec. 5 of the Public Financial Institutions Laws (Amendment) Act, 1975, whichever is earlier, if the Reserve Bank, in consultation with the Trust or the Development Bank, considers it necessary in the interests of the said institutions, to promote any member of the staff of any of the said institutions to a post in either of the other two institutions, it shall be lawful for the Reserve Bank to transfer on promotion any such member of the staff to that other institution, and on such transfer each such member of the staff shall be deemed to be a member of the staff of the institution to which he is so transferred and shall be entitled to the same salary, emoluments and other terms and conditions of service to which he was entitled immediately before the date of such transfer including benefits, if any, arising directly out of such promotion:

Provided that every member of the staff aforesaid may, before the expiry of a period of eighteen months from the notified date or the date of commencement of Sec. 5 of the Public Finance Institutions Laws (Amendment) Act, 1975, whichever is earlier, elect to go back to the institution from which he was so transferred by exercising an option in writing to that effect, the opinion once exercised being final, and on the exercise of such option, that institution shall, before the expiration of a period of thirty months from the notified date or the date of commencement of Sec. 5 of the Public Financial Institutions Laws (Amendment) Act, 1975, whichever is earlier, take back such member of the staff and on such member being taken back by that institution, he shall become a member of its staff and shall cease to be a member of the staff of the institutions to which he was earlier transferred.

(5) Notwithstanding anything contained in any other law or in any agreement, for the time being in force, no member of the staff shall be entitled to claim any compensation for, or in relation to, any matter concerning, his transfer, appointment or, as the case may be, return, under sub-sections (3) and (4), and no claim in respect thereof shall be entertained by any Court, Tribunal or other Authority.]

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1. Inserted by Act 52 of 1975, Section 56.

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(1) Notwithstanding anything contained in 1*[the Wealth- tax Act, 1957 (27 of 1957)], the Income-tax Act, 1961 (43 of 1961), the Super Profits-tax Act, 1963 (14 of 1963),2*[the Companies (Profit) Surtax Act, 1964 (7 of 1964)] or in any other enactment for the time being in force relating to income-tax, super-tax 3*[super profits-tax, surtax] or any other tax on income, profits or gains-

(a) The Trust shall not be liable to pay income-tax, super-tax, super profits-tax, 2 [surtax] or any other tax in respect of any income, profits or gains derived by it from any source;

3*[(aa) In the case of an assessee who is not resident in India, being-

(i) An individual who is an Indian or a person of Indian origin, or

(ii) A Hindu undivided family,there shall not be Included in the total income of such asses see, for the purposes of the Income-tax Act, 1961 (43 of 1961), any income received by such asses see from the Trust, out of funds in a Non-resident (External) Account maintained with any bank in India or by remittance of funds in foreign exchange, in accordance, in either case, with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), or any rules or orders made there under; ]
4 [ * * * * * * ]

3*[(bb) In the case of an asses see who is not resident in India, being an individual who is an Indian or a person of Indian origin, or a Hindu undivided family, wealth-tax shall not be payable by the asses see in respect of, and there shall not be included in, the net wealth of the asses see computed under the Wealth-tax Act, 1957 (27 of 1957), the value of the assets in the form of units acquired from the Trust, out of funds in a Non-resident (External) Account maintained with any bank in India or by the remittance of funds in foreign exchange, in accordance, in either case, with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), or any rules or orders made there under);

(c) Where a contributing institution is liable to be assessed to super profits-tax under the Super Profits-tax Act, 1963 (14 of 1963), 1*[or to surtax under the Companies (Profits) Surtax Act, 1964 (7 of 1964)] in respect of its own income, profits or gains and receives any sum from the Trust under this Act in respect of its contribution to the initial capital, such as, reduced by the amount of any income-tax and super-tax payable in respect thereof shall be excluded from the total income of the said institution in computing its chargeable profits for the purposes of super profits-tax 2* [or surtax].

2*[Explanation I.-In this section,-

(a) 5*[Cl. (aa)], the expressions "previous year" and "total income" shall have the meanings, respectively, assigned to them in the Income-tax Act, 1961 (43 of 1961);

(b) In 6*[Cl. (bb)], the expressions "asses see" and "net wealth" shall have the meanings, respectively, assigned to them in the Wealth-tax Act, 1957 (27 of 1957).

Explanation
II.-For the purposes of sub-sections (1) and (2),-

(a) An asses see shall be deemed to be "not resident in India" if he is a non-resident within the meaning of Cl. (30) of Sec. 2 of the Income-tax Act, 1961 (43 of 1961);

(b) A person shall be deemed to be a person of Indian origin if he or either of his parents or any of his grand parents howsoever high in degree of ascent, whether on the paternal side or on the maternal side, was born, in India, as defined in the Government of India Act, 1935, 7*[who is resident; and], as originally enacted.]

(2) Notwithstanding anything contained in Sec. 193 or Sec. 194 of the Income-Tax Act, 1961 (43 of 1961),-

(a) On deduction of income-tax or super-tax shall be made on any interest or dividend payable to the Trust in respect of any securities or share owned by it or in which it has full beneficial interest; 8 [***]

9 [ * *  * ]

(3) Subject to the foregoing sub-sections for the purposes of the Income-tax Act, 1961 (43 of 1961),-

(a) Any distribution of income received by a unit- holder from the Trust shall be deemed to be his income by way of dividends; and

(b) The Trust shall be deemed to be a company.

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1. Inserted by Act 16 of 1975, Section 6 (w.e.f. 1st April, 1975).

2. Inserted by Act 17 of 1966, Section 10 (w.e.f. 10th June, 1966).

3. Inserted by Act 3 of 1976, Sec, 2.

4. Clauses (b) and (ba) omitted by Finance Act, 1984 (21 of 1984), Section 54 (w.e.f. 1st April, 1985).

5. Substituted by Act 17 of 1966, Section 54, for the words, brackets and letters "Clauses (aa) and (b)" (w.e.f. 1st April, 1985).

6. Substituted by Finance Act, 1984 (21 of 1984), Section 54, for the words brackets and letters "Clauses (ba) and (bb).

7. Inserted by Act 10 of 1965, Section 73.

8. Omitted by Finance Act, 1984 (21 of 1984), Section 54, for the words "brackets and letters".

9. Clauses (b), (c) and proviso omitted by Act 22 of 1995, Section 90 (w.e.f. 1st July, 1995).

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The Bankers', Books Evidence Act, 1891, shall apply in relation to the Trust as if it were a bank as defined in Sec. 2 of the said Act.



Every trustee, auditors, officer or other employee of the Trust or any employee of the Reserve Bank whose services are utilized by the Trust under Sec. 31 shall, before entering upon his duties make a declaration of fidelity and secrecy in the form set out in the First Schedule to this Act.



(1) No act or proceeding of the Board or of any committee of the Trust shall be questioned on the ground merely of the existence of any vacancy in, or defect in the constitution of, the Board or committee.

(2) No act done by any person acting in good faith as a trustee shall be deemed to be invalid merely on the ground that he was disqualified to be a trustee or there was any other defect in his appointment.



(1) Every trustee shall be indemnified by the Trust against all losses and expenses incurred by him in, or in relation to, the discharge of his duties except, such as, are caused by his own willful act of default.

(2) A trustee of the Board shall not be responsible for any other trustee or for any officer or other employee of the Trust, or of any loss or expenses resulting to the Trust, from the insufficiency or deficiency of value of or title to any property or security acquired or taken on behalf of the Trust or the insolvency or wrongful act of any debtor or any person under obligation to the Trust of anything done in good faith in the execution of the duties of his office or in relation thereto.



No suit or other legal proceeding shall lie against the Trust or 1*[the Reserve Bank or the Development Bank] or any trustee or any officer or other employee of the Trust or1*[the Reserve Bank or the Development Bank] or any other person authorized by the Trust to discharge any functions under this Act, for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act.

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1. Substituted by Act 52 of 1975, Section 57 (w.e.f. 16th February, 1976).

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The Board may, by general or special order, delegate to any officer of the Trust, subject to such conditions and limitations, if any, as may be specified in the order, such of its powers and duties under this Act as it may deem necessary.



Except to the extent provided in, and except in accordance with the regulations made under this Act, no notice of a trust, express, implied or constructive, shall be receivable by the Trust.

39A - Nomination by unit holders and agents

(1) Notwithstanding anything contained in any other law for the time being in force,-

(a) Where a nomination in respect of any units has been made in accordance with the regulations made under this Act, the amount payable to the unit holder in respect of the said units shall, on the death of the unit holder but subject to any right, title, claim or other interest of any other person to or in respect of the said units as

provided in such regulations, and subject to any charge or encumbrance over the said units, vest in, and be payable to, the nominee;

(b) Where any person appointed by the Trust as an agent for soliciting or procuring any business, including the sale of units, has nominated, in accordance with the regulations made under this Act, any person or a social or charitable institution, to receive the commission or other remuneration payable to him after his death, such commission or other remmuneration shall, on the death of the person making the nomination, be payable to his nominee:

Provided that nothing contained in this section shall affect any nomination made before the date on which the Trust Laws (Amendment) Act, 1975, receives the assent of the President.

(2) A payment by the Trust under sub-section (1) shall be a full discharge to the Trust, from all liability in respect of the units, or, as the case may be, the commission or other remuneration.

39B - Protection of certain amounts from attachment

Notwithstanding anything contained in any other law for the time being in force, the amount standing to the credit of a contributing institution shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by the contributing institution.

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1. Substituted by Act 16 of 1975, Section 7 (w.e.f. 7th January, 1975).

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(1) In the event of a contributing institution referred to in Cl. (d) of sub-section (2) of Sec. 4 being wound up, the Trust shall, on a demand in that behalf made by the authority in charge of the winding-up, pay to such authority an amount equivalent to the value of the contribution to the initial capital made by that institution.

(2) The value of the contribution shall be determined by the Board on such basis as the Central Government may specify, regard being had to the real or exchangeable value of such contribution.



(1) Notwithstanding anything contained in Sec. 10 or Sec. 11, where the whole of the initial capital has been refunded to the contributing institutions, the Central Government may, after consultation with the 1*[Development Bank], by order, provide for the re-constitution of the Board.

(2) An order made under sub-section (1) may provide for all or any of the following matters, namely:

(a) The number of trustees that will constitute the Board;

(b) The manner in which they shall be chosen;

(c) Their term of office;

(d) Filling of casual vacancies;

(e) Such incidental, consequential and supplementary matters as be necessary to give effect to the order including the re-constitution of the executive committee or other committees.

(3) Every order made under this section shall be published in the official Gazette and a copy thereof shall be laid before each House of Parliament as soon as may be after it is made.

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1.Substituted by Act 52 of 1975, Section 52 (w.e.f. 16th February, 1976).

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(1) The Trust shall not be placed in liquidation save by order of the Central Government and in such manner as it may direct.

(2) In making such order, the Central Government shall, if the initial capital has been wholly refunded, direct among other things, that,-

(i) The value of the net assets of the Trust after paying off all its liabilities, other than those in respect of all the initial capital and the unit capital shall be divided into two parts in the same proportion as the aggregate face value of all the units immediately prior to the date on which the Trust is placed in liquidation bears to the initial capital as on that date; and

(ii) The first part shall be distributed among the contributing institutions in proportion to their respective contributions to the initial capital as on that date and the second part shall be distributed among the unit-holders in proportion to the face value of the unit held by them as on that date.



(1)1*[The Board, with the previous approval of the Development Bank, may, by notification in the Official Gazette,] make regulations not inconsistent with this Act to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such regulations may provide for-

(a) The form and manner of maintenance of the register of contributing institutions and the particulars to be contained therein;

(b) The face value of a contribution certificate, its form and the particulars to be contained therein;

(c) The manner of transfer of a contribution certificate;

(d) The rights and liabilities of a contributing institution;

(e) The holding and conduct of elections under this Act, including the final decision on doubts or disputes regarding the validity of elections;

(f) The fees and allowances that may be paid to the trustees;

(g) The times and places of the meetings of the Board or of any committee constituted under this Act and the procedure to be followed at such meetings including the quorum necessary for the transaction of business;

(h) The fees and allowances that may be paid to the members of a committee, other than trustees;

1*[(i) The institutions which loans or advances may be granted or with which money may be kept in deposit.

(i-a) Special papers or securities floated by Governments or banks in which investment may be made;

(i-b) The particulars which may be included in an application under Sec. 19-B; ]

(j) The manner of distribution of income to the contributing institutions;

(k) The form and manner in which the balance-sheet and the accounts of the Trust shall be prepared and maintained;

(l) The date on which the books of accounts of the Trust shall be balanced and closed each year;

(m) The duties and conduct, salaries and allowances and other conditions of service of officers and other employees of the Trust;

(n) The establishment and maintenance of provident or other benefit funds for officers and other employees of the Trust;2[* * *]

3*[(nn) The extent to which and the circumstances under which nominations may be recognized and Trust may be taken notice of; and

(o) Any other matter which is to be, or may be, prescribed.]

(3) Any regulation which may be made by the Board under this Act may be made by the Reserve Bank within three months of the establishment of the Trust and any regulation so made may be altered or rescinded by the Board in the exercise of its powers under this Act.

4*[(4) Every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation or both Houses agree that the regulation should not be made, the regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.)

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1. Substituted by Act 63 of 1985, Section 11 (w.e.f. 23rd April, 1985).

2. Omitted by Act 16 of 1975, Section 8 (w.e.f. 7th January, 1975).

3. Inserted by Act 16 of 1975, Section 8 w.e.f. 7th January, 1975.

4. Inserted by Act 63 of 1985, Section 11 (w.e.f. 23rd April, 1985).

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1[*****]

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1. Repealed by Act 56 of 1974, Section 2 and Schedule I (w.e.f. 20th December, 1974).

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If any difficulty arises in giving effect to the provisions of this Act, as amended by the Public Financial Institutions Laws (Amendment) Act, 1975, the Central Government may, by order, do anything, not inconsistent with such provisions, for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiration of three years from the date of commencement of the said Amendment Act.]

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1. Inserted by Act 52 of 1975, Section 58.

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Schedule 1

THE FIRST SCHEDULE
[See Sec. 34]

DECLARATION OF FIDELITY AND SECRECY

I do hereby declare that I will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as trustee, auditor, officer or other employee (as the case may be) of the Unit Trust of India and which properly relate to the office or position held by me in the said Trust.

I further declare that I will not communicate or allow to be communicated to any person not legally entitled thereto any information relating to the affairs of the Unit Trust of India or to the affairs of any person having any dealing with the said Trust; nor will

I allow any such person to inspect or have access to any books or documents belonging to or in the possession of the Unit Trust of India and relating to the business the said Trust or the business of any person having any dealing with the said Trust.
Signed before me:

(Signature)

Schedule 2

THE SECOND SCHEDULE

1[ * * * * ]

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1. Repealed by Act 56 of 1974, Section 2 and Schedule I (w.e.f. 20th December, 1974).

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Last updated on September, 2016

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