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The article discusses the new regime of INVITS and REITS. The terminology INVITS stands for – Indian Infrastructure Investment Trust and REITS- Real Estate Investment Trust. The Indian Infrastructure Investment Trust and Real Estate Investment Trust has drawn investments from some of the largest global institutional investors, sovereign wealth funds and pension funds. It has been statistically drawn that the sum of INVITS and REITS is $3.6 Billion of Capital.
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This move enables Foreign Portfolio Investors (FPI) to debt finance REITS and INVIT, which are likely to assist cash stressed real estate sector. Our finance minster has remarked that infrastructure is a long term debt financing. It requires professional managed debt financial institution (DFI) to act as a provider for infrastructure financing. The FPI- Foreign Portfolio investors will be able to debt finance the REIT and INVIT. The Union Budget of 2021-2022 has allocated the DFI of Rs.20,000 Crores with an ambition of the lender to have a portfolio of 5 lakhs crores within three years time period. This will allow flow of funds in the real estate and infrastructure projects sector.
Read our article:Major Highlights of the Union Budget 2021-22 (Part-1): Direct & Indirect Tax Proposals
The two vehicles are referred to as Business Trust, and it has significant potential in achieving its targets of massive infrastructure development. These regimes were introduced in India recently.
The steps which helped in bring out the regimes are:
The changes which have been introduced In the INVETIS and REITS are as follows:
According to this bill, the new regime does not allow DDT-dividend distribution tax to be discontinued for the unit holders. However, it allows the business trust to be exempt from the tax on dividend income from a SPV.
According to the INVIT and REIT Regulations, an INVIT or REIT is permitted to have level holding structure, as the business trust holds the share in the SPV through a holding company. The Income Tax Act does not stop the multi-level structure from the applicability of DDT. The current bill abolishes Section 115O of the Act and introduces the section 80M of the Act .
This section provides for a deduction for dividends received by one domestic company from another domestic company. In light of the above, under the proposed provisions of the Bill, the holding company would be able to claim deduction for the dividends received from the SPV, resulting in reduction of its tax cost.
It can be concluded INVIT and REIT has been amended to increase the flow in the real estate and infrastructure sector. The amendments will help the sector to raise considerable amount of funds.
She is B.Com (H), LL.B LLM, Cs (Module 2) And Certification In Cyber Law From ILI Qualified. She has Been A Legal Teacher In The Previous Organization. My Strength Is My Expertise Knowledge In Civil Laws, Corporate Law And Tax Laws. I Have Been Legal Teacher And Legal Trainer In The Past Organization. Her Knowledge About The Subjects Have Expanded Due To Teaching Number Students From Various Universities All Over India.
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