As per the ammendment made in 2023, the taxation of REIT’s distribution is changed. Only if cumulative distribution goes beyond aquisition cost of the units, it’s taxable, that too only repayment of debt portion.
Source: Amended Finance Bill softens impact of tax on distributions by REITs, InvITs - The Hindu BusinessLine
Please correct me if this understanding is wrong.
1 Like
To my knowledge now the debt portion is always taxed, either the same year or while you sell it. The impact depends on your sale date and tax slab as well.
- When you sell the share, the profit will be sell price - buy price + debt component
- Once the total debt repayment crosses the IPO price, the debt component will be taxed at slab rate.
Hope this image gives more clarity:
1 Like
This is really helpful, so turns out my understanding was incorrect.
