Now Reading: Tax bill in Lok Sabha: REIT, InvIT dividends get exemption
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Tax bill in Lok Sabha: REIT, InvIT dividends get exemption
The Lok Sabha on August 6 passed the Taxation and Other Laws (Amendment) Bill, 2026, which exempts dividends paid by Special Purpose Vehicles (SPVs) to Real Estate Investment Trusts (REITs) and Infrastructure…
The Story in Brief
The Lok Sabha on August 6 passed the Taxation and Other Laws (Amendment) Bill, 2026, which exempts dividends paid by Special Purpose Vehicles (SPVs) to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) even if the SPV opts for the new concessional tax regime. Previously, such dividends were tax-free only under the old regime. The Bill needs Rajya Sabha approval and presidential assent to become law.
From FY2026-27, SPVs staying in the old regime will pay Minimum Alternate Tax (MAT) at a reduced rate of 14%, but this will be the final tax liability and no new MAT credits can be accumulated after April 1, 2026. Existing MAT credits can only be used after an SPV shifts to the new regime, and only up to 25% of that year's liability can be adjusted. The Share India Institutional Business report expects the shift to happen in phases, with infrastructure SPVs that have large MAT credits or whose tax holiday has ended likely to move first.
The Indian Opinion
The debate on REIT taxation often paints the new regime as a clear win for retail investors. But the real trade-off is between a lower headline rate for SPVs and the loss of accumulated MAT credits. The phased shift suggests many infrastructure companies will not find the calculus straightforward. The real test of this policy is not the first quarter's rhetoric, but whether MAT credits worth crores actually get unlocked over the next two years.
Sources (2): economictimes.indiatimes.com, thehindubusinessline.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
