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FPIs look to Budget for clarity on REIT, InvIT taxation rate

Uncertainty arises from tweak in SCRA; entities take conservative view, pay higher tax of 20% on interest income

FPI funding in September comes after buying to the tune of Rs 16,459 crore in August, with a record Rs 14,376.2 crore investment in the bonds market.
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REITs and InvITs typically pay out at least 90 per cent of their net cash flow to unitholders in the form of dividends and interest

Ashley Coutinho
The Union Budget may provide clarity on the tax to be paid on interest income earned from investments in real estate investment trusts (REITs) and Infrastructure Investment Trusts (InvITs) by foreign portfolio investors (FPIs).

Several FPIs have taken a conservative view and have started paying a higher tax of 20 per cent for such income. This is because of the amendment in the definition of ‘securities’ in the Securities Contracts Regulation Act (SCRA) with effect from April 1, 2021, which now extends to the units of REITs and InvITs as well.

Interest income distributed by a business trust to non-resident

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First Published: Jan 21 2022 | 12:14 AM IST

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