REIT, InvIT dividends may stay tax-free under new regime

The Story in Brief

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026, on August 6, proposing tax exemption for dividends received by REIT and InvIT unitholders even when the underlying special purpose vehicle chooses the new tax regime. The Bill still needs Rajya Sabha approval and the President’s assent. At present, the exemption applies only when the SPV follows the old regime.

The change comes with a higher SPV surcharge of 25%, against 10% under the old regime. Economic Times reports that the choice will therefore depend on each trust’s finances. Chartered Accountant Suresh Surana said the amendment could help unitholders, while Embassy REIT CEO Amit Shetty said it may also allow SPVs to use accumulated MAT credits.

The Indian Opinion

Claims that the Bill simply makes REIT investing tax-free miss the trade-off. Unitholders may gain an exemption, but the SPV could face a 25% surcharge instead of 10%. The best choice will vary with each trust’s structure, cash flows and tax position. Investors should wait for the enacted text and then compare the total tax cost, not just the dividend treatment. The 15 percentage-point surcharge gap is the number to watch.

Source: economictimes.indiatimes.com

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