Foreign funds invested in dividend paying REITs and InvITs were roiled post the Budget 2020 proposal which extended DDT to business trusts.
Investors in business trusts like infrastructure investment trusts (InvITs) and real estate investment trusts (REITs) have received the much needed relief by way of exemption from the dividend distribution tax (DDT) in the Finance Bill 2020 passed by Lok Sabha on Monday. The amendment, however, clarifies that the DDT exemption will be given only for the companies which have not migrated to the new corporate tax regime.
Foreign funds invested in dividend paying REITs and InvITs were roiled post the Budget 2020 proposal which extended DDT to business trusts. The changes in DDT, making it taxable in the hands of the shareholders, made these instruments less attractive for the investors.
The DDT change had adversely impacted the dividend paying business trusts mostly in the real estate sector. “This had not only impacted the returns of the already invested foreign funds, but, has also made the future issuance unattractive,” one of the experts pointed out. The experts had also made several representations to the government.
Proposed REITs include K Raheja, Blackstone, Brookfield and Prestige Estates.
Meanwhile, market regulator SEBI, in the light of COVID-19, has decided to extend the due date for regulatory filings and compliance for these trusts for the period ending March 31, 2020 by one month.
First Published: Mar 23, 2020 8:26 PM IST
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