The amendments to the Finance Bill 2023, passed by Lok Sabha and that received the President’s assent, include changes to the budget proposal pertaining to taxation of real estate investment trusts (Reits) and infrastructure investment trusts (InvITs).
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Now, the ‘loan repayment’ distribution component from reits and invits need not be treated as income from other sources, as stated in the Budget. According to the Finance Act 2023, such income gets capital gains tax treatment for a certain number of years (explained later).
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This amendment brought relief to investors as well as industry players as capital gains attract just 10% tax if held for the long term (36 months). This is against the tax on ‘other income’ that is at individual’s slab rates, which can go to as high as 42% (including surcharge and cess) for those in the higher tax bracket.
