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Both Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) are structured as trusts in India and are regulated by the SEBI. They operate as pass-through entities for certain types of income to avoid double taxation. However, the tax treatment of income distributed to un
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If the SPV does not opt for the concessional tax rate, dividend income is exempt for unitholders. If the SPV opts for the concessional rate, the dividend income is taxable at the unitholder's applicable slab rates, with 10% TDS on amounts exceeding certain thresholds.
Interest income received by unitholders from both REITs and InvITs is taxable at their applicable slab rates, with a 10% TDS. For non-resident InvIT investors, the TDS rate is 5% or as per the DTAA, whichever is lower.
Short-term capital gains are taxed at 15% or 20% depending on the transfer date. Long-term capital gains are taxed at 10% or 12.5% based on the gain amount and transfer date, with no indexation benefits.
REITs primarily invest in real estate assets, while InvITs invest in infrastructure assets.
Historically, InvIT IPOs had a higher minimum investment (Rs 10 lakh) compared to REITs (Rs 50,000). However, SEBI is considering aligning these, potentially reducing the difference for privately placed InvITs.
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