New investment instrument tax would still act as additional taxes
While Sebi readies to introduce the concept of Real Estate and Infrastructure Investment Trusts in the country, the government has decided to provide the significant tax benefits for these listed business trusts. The proposed tax exemptions and benefits notwithstanding, these new investment instruments would still be ‘revenue accretive’ for the government in the form of additional taxes.
Among the other exemptions, any kind of capital gains tax on units of InvITs would also be levied only at the time of ultimate disposal of the units of the sponsor under the new norms, sources said. However, the sponsor would not be entitled to the concessional STT-based capital gains tax regime at the time of ultimate disposal of the units of the business trust.
STT refers to Securities Transaction Tax, a small tax amount which is applicable to all transactions in securities markets. In another benefit, any kind of dividend would be tax exempt in the hands of the business trust and the dividend component of the income distributed by the business trust would also be exempt in the hands of unit holder. However the details have yet not been provided on when the additional tax would be levied.
Source: Financial Chronicle
additional taxes, Infrastructure Investment Trusts, instrument tax, Securities Transaction Tax, Tax benefits
