INCLUDING PROFITS FROM REIT / INVIT IN SHARE TRADING BUSINESS U/S 44AD

Requesting for guidance..

REIT and INVIT units sold as capital assets cannot be merged into Section 44AD business income. They need separate reporting in Schedule CG.

Here is the distinction that matters:

Section 44AD covers business income from eligible businesses with turnover up to Rs 2 crore. It lets you declare 6% or 8% of turnover as profit without maintaining books. This works for your delivery-based share trading if the department accepts it as business (not investment).

But REIT/INVIT units get a different treatment under the Income Tax Act:

If held as capital assets (the typical case): gains go into Schedule CG. Listed REIT/INVIT units held for MORE than 36 months qualify as LTCG under Section 112A at 12.5% (after Rs 1.25 lakh exemption). Held 36 months or less, they are STCG at 20%.

If held as stock-in-trade (actively bought and sold as trading inventory, with books showing them as such): the gains could be treated as business income. But this requires clear documentation and department acceptance - it is rarely straightforward for REIT/INVIT.

For your ITR-3:
- 44AD applies to your share trading turnover (delivery-based equity)
- REIT/INVIT unit gains go separately in Schedule CG
- REIT/INVIT distributions (dividend/interest/capital return components) go under Schedule OS or as pass-through per Section 115UA

Mixing them into 44AD turnover without proper classification is a scrutiny risk.

This [REIT and INVIT taxation guide for AY 2026-27](https://taxgarden.in/blog/reit-invit-taxation-india-ay-2026-27-section-115ua-distributions-capital-gains) covers the Section 115UA pass-through rules, capital gains rates, and the ITR-3 schedule mapping.

Thanks a lot for a detailed and clear reply..

Correction on holding period: from 23-07-2024, listed REIT/InvIT units are long-term after 12 months, not 36 – LTCG u/s 112A at 12.5% beyond ₹1.25 lakh, and STCG u/s 111A at 20% if held 12 months or less.