Govt to provide uniform tax treatment for unlisted InvITs, REITs

The government has proposed changes in the Income Tax law to ensure uniform treatment for unlisted Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs).

The proposal is part of the Finance Bill tabled in the Parliament on Saturday.

The Income Tax (I-T) Act provides for a taxation regime for business trusts. Definition of a business trust means a trust registered as an InvIT or a REIT under markets regulator Sebi and these units need to be listed on a recognised stock exchange.

Against this backdrop, the Finance Bill 2020 said representations have been received stating that private unlisted InvITs should be given the same status as public listed InvITs with regards to tax treatments provided under the Act.

Further, Sebi has done away with the requirement of mandatory listing of InvIT and REIT units.

"In light of this, the definition of business trusts under the Act is required to be aligned with the amended Sebi Regulations. Therefore, it is proposed to amend clause (13A) of Section 2 of the Act to modify the definition of 'business trust' so as to do away with the requirement of the units of business trust to be listed on a recognised stock exchange.

"This amendment will take effect from April 1, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years," the Bill said.