The central government has prepared significant support for small and large investors in REITs and InvITs (Infrastructure Investment Trusts). According to the 'Taxation and Other Laws Bill, 2026,' dividends received from these trusts will remain fully tax-exempt, even if their parent companies switch to a new corporate tax system.
According to sources from the Ministry of Finance, the main goal of this step is to ensure the security of retail investors' funds and support the inflow of capital into the country's real estate and infrastructure sectors.
Under current tax regulations, REITs and InvITs distribute income received from their subsidiaries among investors. Previously, these dividends were tax-exempt only if the company adhered to the old corporate tax system.
Recently, as companies began opting for a new corporate tax system with lower rates, there was a threat to investors that their tax-exempt income could be lost, and the tax burden could increase.
In the proposed bill, the government has presented several important provisions to alleviate the situation for investors.
Restoration of Tax Status: Regardless of whether the company operates under the old or new tax system, dividends paid to investors will not be taxed, as before.
Minor Company-Level Tax: To avoid losses in government tax revenue, it is proposed to introduce only a minor additional tax directly at the company level (SPV), instead of taxing the investors.
Income Preservation: Thanks to this scheme, the actual profit received by ordinary investors will not decrease, while state tax collection will be maintained.
Retail and large investors who invest in REITs and InvITs in search of regular income will no longer face uncertainty in the rules. This will ensure long-term access to capital for large projects such as highways, power plants, warehouses, and commercial real estate.
This bill is part of a broader government plan aimed at stimulating 'ease of doing business' in India and attracting foreign capital. If this bill is passed into law, it will make India's tax structure more transparent and stable, strengthening the confidence of both domestic and foreign investors.



