CNK in the News: The Hindu BusinessLine
REIT and InvIT tax relief comes with a surcharge trade-off
Our Partner, Pallav Pradyumn Narang, was quoted by The Hindu BusinessLine in a report on the proposed tax overhaul for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
The article explains that the recent taxation bill would allow REIT and InvIT special purpose vehicles (SPVs) to opt for the concessional corporate tax regime without making the dividend component of distributions taxable in the hands of unitholders. This could reduce uncertainty around fundraising and support new launches. However, the surcharge payable by SPVs would rise to 25% from 10%, which may temper the near-term benefit to distributable cash flows.
CNK perspective
Pallav Pradyumn Narang said that the higher surcharge could counterweigh the benefit of the proposed regime by increasing tax outflows. He suggested that the government consider removing the additional surcharge or adopting a lower rate of increase. The article also notes that the concessional regime can still produce an effective tax rate of around 28.60%, compared with about 34.94% under the earlier framework.
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