Form 78 Under Section 224 of Income Tax Act 2025: Everything Investment Funds and Unit Holders Must Know

Overview and Background

With the introduction of the Income Tax Act, 2025, several forms and compliance mechanisms have been restructured and renamed to align with the updated legislative framework. One such critical instrument is Form 78, which replaces the earlier Form 64C prescribed under the Income Tax Rules, 1962. This form plays a vital role in the pass-through taxation ecosystem applicable to Alternative Investment Funds (AIFs) and similar investment vehicles.

Understanding Form 78 is essential not only for fund managers and investment fund administrators but also for unit holders who rely on this document to correctly file their income tax returns and compute their tax liability on distributed income.

Quick Reference Table

What is Form 78?

Form 78 is a unit holder-specific statement issued by an investment fund to each of its unit holders, reporting the income that has been distributed, paid, or credited to them during a given tax year. It is prescribed under Section 224 of the Income Tax Act, 2025, and is governed by Rule 145 of the Income Tax Rules, 2026.

The form is not an independently filed document. Rather, it is a child form automatically derived from Form 79, which serves as the parent or consolidated filing made by the investment fund with the Income Tax Department. Once Form 79 is successfully submitted on the e-filing portal, the system auto-generates individual Form 78 statements for every unit holder based on the data captured therein.

This system-driven generation mechanism ensures consistency between fund-level disclosures and investor-level statements, significantly reducing the scope for reporting mismatches or discrepancies.

Who Is Responsible for Furnishing Form 78?

The obligation to furnish Form 78 rests with the person responsible for paying or crediting income on behalf of the investment fund — typically the Fund Manager or a designated official authorized to act on behalf of the fund.

This requirement applies specifically to:

• Category I Alternative Investment Funds (AIFs) registered with the Securities and Exchange Board of India (SEBI) or the International Financial Services Centres Authority (IFSCA)
• Category II Alternative Investment Funds (AIFs) registered with SEBI or IFSCA
• Funds regulated under the IFSCA (Fund Management) Regulations, 2022

These funds benefit from a pass-through taxation structure, meaning the fund itself is not subject to tax on the income it earns; instead, the income is taxed directly in the hands of the unit holders, preserving its original character.

Deadline for Providing Form 78 to Unit Holders

Form 78 must be furnished to each unit holder by 30th June of the financial year immediately following the tax year in which the income was paid or credited to the unit holder.

For instance, if income is distributed during tax year 2025–26, Form 78 must be provided to all unit holders on or before 30th June 2026.

This timeline is aligned with the ITR filing deadline of 31st July (for individuals not subject to audit), ensuring that unit holders receive adequate time to incorporate Form 78 data into their tax returns before the due date.

Structure and Contents of Form 78

Form 78 is organized into distinct sections, each serving a specific reporting purpose. The following is a breakdown of its key components:

Personal Information of the Unit Holder

This section captures complete identification and contact details of the individual or entity receiving the income distribution: