Consider the following statements:
Statement-I:
Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II :
InvITs are recognized as borrowers under the ‘Securitization and Recon- struction of Financial Assets and Enforcement of Security Interest Act, 2002’.
Which one of the following is correct in respect of the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct
Explanation:
Income from InvITs is taxable as per the investor’s slab rate
- Statement 1 is incorrect: Dividend and interest income from InvITs is completely taxable as per the slab rate of the investor.
Amendments to support InvITs and REITs
- Statement 2 is correct: In a statement on February 11, 2021, the Finance Ministry announced its intention to introduce amendments to several acts to facilitate funding for the infrastructure and real estate sectors.
- The amendments will be made to the following acts:
- Securities Contracts (Regulation) Act (SCRA) 1956
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002
- Recovery of Debts Due to Banks and Financial Institutions Act (‘Recovery of Debts Act’) 1993
- The purpose of these amendments is to enable infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) to easily access debt financing from investors, including foreign portfolio investors (FPIs).
Inputs from Current Affairs Notes and Internet
