{"id":36826,"date":"2023-02-03T16:57:00","date_gmt":"2023-02-03T11:27:00","guid":{"rendered":"https:\/\/tradebrains.in\/features\/biz-embassy-reit\/"},"modified":"2023-02-03T16:55:12","modified_gmt":"2023-02-03T11:25:12","slug":"biz-embassy-reit-3","status":"publish","type":"post","link":"https:\/\/tradebrains.in\/features\/biz-embassy-reit-3\/","title":{"rendered":"Proposal to tax income distribution in form of debt repayment to impact REITs attractiveness for unitholders"},"content":{"rendered":"<div class=\"trade-content_2\" style=\"margin-left: auto;margin-right: auto;text-align: center;\" id=\"trade-4126159123\"><p><a href=\"https:\/\/tradebrains.in\/get\/telegram\/\"><img decoding=\"async\" class=\"alignnone wp-image-101992\" src=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2023\/01\/telegram-channel-300x119.png\" alt=\"\" width=\"148\" height=\"59\" \/><\/a> <a href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN3Epgswxc--Aw?hl=en-IN&amp;gl=IN&amp;ceid=IN%3Aen\"><img decoding=\"async\" class=\"alignnone wp-image-123430\" src=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-300x82.png\" alt=\"follow-on-google-news\" width=\"222\" height=\"61\" srcset=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-300x82.png 300w, https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-150x41.png 150w, https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news.png 468w\" sizes=\"(max-width: 222px) 100vw, 222px\" \/><\/a><\/p>\n<\/div><p>Embassy Office Parks REIT on Friday said the proposal to tax income distributed by business trusts in the form of debt repayments at the hands of unitholders has created some uncertainties in the market, and the industry is considering making a presentation to the government on the success of this investment vehicle.<\/p><div class=\"trade-content_7\" style=\"margin-left: auto;margin-right: auto;text-align: center;\" id=\"trade-1454672061\"><!-- Composite Start --> \r\n <div id=\"M923760ScriptRootC1549812\"> \r\n <\/div> \r\n <script src=\"https:\/\/jsc.mgid.com\/t\/r\/tradebrains.in.1549812.js\" async> \r\n <\/script> \r\n <!-- Composite End --><\/div><p>The proposal impacts around 40 per cent of its current distribution, the Bengaluru-based firm said. Embassy REIT is the country&#8217;s India&#8217;s first listed REIT (Real Estate Investment Trust).<\/p><p>In her Budget speech on February 1, Finance Minister Nirmala Sitharaman proposed to &#8220;tax distributed income by business trusts in the hands of a unit holder (other than dividend, interest or rent which is already taxable) on which tax is currently avoided both in the hands of the unit holder as well as in the hands of business trust&#8221;.<\/p><p>The proposal is aimed at widening the tax base in business trusts like REITs and InVITs (Infrastructure Investment Trusts).<\/p><div class=\"trade-content_5\" id=\"trade-576676216\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-4023722985638610\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<!-- in_content_2_news -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-4023722985638610\"\r\n     data-ad-slot=\"7925020301\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><\/div><p>While a REIT comprises a portfolio of commercial real assets, a major portion of which is already leased out, an InVIT consists of a portfolio of infrastructure assets, such as highways and power transmission assets.<\/p><p>The distributions made by the business trust to its unit holders, shown as repayment of the debt, are actually an income of the unit holder, which does not suffer taxation either in the hands of the business trust or in the hands of the unit holder. The government has therefore proposed to make such a sum received by the unit holder taxable in his hands.<\/p><p>In a statement, Embassy REIT said: &#8220;While the recent announcements in the Budget have created some uncertainties in the market regarding the taxation of one of the distribution components, the announcement impacts around 40 per cent of our current distributions&#8221;.<\/p><p>REITs are a total return product, combining steady distributions with upside on account of capital appreciation driven by growth levers, it noted.<\/p><p>&#8220;We, along with other industry participants, are currently evaluating the next steps, including suitable representations given the to-date attractiveness and success of the product, especially to retail investors,&#8221; Embassy REIT said.<\/p><p>The company said it recently paid out the 15th consecutive quarter of 100 per cent distributions, now totalling Rs 7,300 crore.<\/p><div class=\"trade-content-10\" id=\"trade-2772416987\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-4023722985638610\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<!-- in_content_3_news -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-4023722985638610\"\r\n     data-ad-slot=\"2969612066\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><\/div><p>&#8220;Our best-in-class unit-holder register comprises sovereign wealth funds, global mutual funds, domestic mutual funds, life insurers, family offices, high net worth individuals (HNIs) and retail investors. We will continue to serve the interests of all our stakeholders by doing what we have done before we listed and since we have listed: providing the best office solutions to the world\u2019s best companies,&#8221; it said.<\/p><p>Explaining the move in the memorandum of the Finance Bill, the government said that interest, dividend and rental income have been accorded a pass-through status at the level of business trust and are taxable in the hands of the unit holder.<\/p><p>&#8220;However, in respect of the distributions made by the business trust to its unit holders which are shown as repayment of the debt, it is actually an income of the unit holder which does not suffer taxation either in the hands of business trust or in the hands of unit holder,&#8221; it added.<\/p><p>The government said the dual non-taxation of any distribution made by the business trust i.e. which is exempt in the hands of the business trust as well as the unit holder, is not the intent of the special taxation regime applicable to business trusts.<\/p><p>Therefore, &#8220;it is proposed to make such sum received by unit holder taxable in his hands&#8221;.<\/p><p>These amendments will apply to the assessment year 2024-25 and subsequent assessment years, the document said.<\/p><p>As per the budget document, the Finance (No 2) Act, 2014, introduced a special taxation regime for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs) (commonly referred to as business trusts).<\/p><p>The special regime was introduced to address the challenges of financing and investment in infrastructure. The business trusts invest in special-purpose vehicles through equity or debt instruments. PTI MJH MJH BAL BAL<\/p><div class=\"trade-after-content\" id=\"trade-1340309886\"><div id=\"taboola-below-article-thumbnails\"><\/div>\r\n<script type=\"text\/javascript\">\r\n  window._taboola = window._taboola || [];\r\n  _taboola.push({\r\n    mode: 'alternating-thumbnails-a',\r\n    container: 'taboola-below-article-thumbnails',\r\n    placement: 'Below Article Thumbnails',\r\n    target_type: 'mix'\r\n  });\r\n<\/script>\r\n<script type=\"text\/javascript\">\r\n  window._taboola = window._taboola || [];\r\n  _taboola.push({flush: true});\r\n<\/script><\/div>","protected":false},"excerpt":{"rendered":"<p>Embassy Office Parks REIT on Friday said the proposal to tax income distributed by business trusts in the form of debt repayments at the hands of unitholders has created some uncertainties in the market, and the industry is considering making a presentation to the government on the success of this investment vehicle. The proposal impacts [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":82782,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[1697,31],"tags":[],"class_list":["post-36826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.5 (Yoast SEO v25.0) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Proposal to tax income distribution in form of debt repayment to impact REITs attractiveness for unitholders - Trade Brains Features<\/title>\n<meta name=\"description\" content=\"Embassy Office Parks REIT on Friday said the proposal to tax income distributed by business trusts in the form of debt repayments at the hands of unitholders has created some uncertainties in the market, and the industry is considering making a presentation to the government on the success of this investment vehicle.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tradebrains.in\/features\/?p=36826\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Proposal to tax income distribution in form of debt repayment to impact REITs attractiveness for unitholders\" \/>\n<meta property=\"og:description\" content=\"Embassy Office Parks REIT on Friday said the proposal to tax income distributed by business trusts in the form of debt repayments at the hands of unitholders has created some uncertainties in the market, and the industry is considering making a presentation to the government on the success of this investment vehicle.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/tradebrains.in\/features\/?p=36826\" \/>\n<meta property=\"og:site_name\" content=\"Trade Brains Features\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/TradeBrainsOfficial\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-02-03T11:27:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2023\/01\/real-estate-building-cover-image.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"854\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"PTI News\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2023\/01\/real-estate-building-cover-image.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@TradeBrainsGrp\" \/>\n<meta name=\"twitter:site\" content=\"@TradeBrainsGrp\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"PTI News\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/tradebrains.in\/features\/?p=36826\",\"url\":\"https:\/\/tradebrains.in\/features\/?p=36826\",\"name\":\"Proposal to tax income distribution in form of debt repayment to impact REITs attractiveness for unitholders - 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