InvestorQ : Are there a large number of INVIT issues scheduled and how will dividend tax impact these INVITs?
Anamika Sodhani made post

Are there a large number of INVIT issues scheduled and how will dividend tax impact these INVITs?

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8 months ago
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INVITs have huge potential with the need to monetize infrastructure but you are right that the dividend tax could pose a dampener to the stock. ICRA estimates that the total INVITs to hit the market could cross Rs.200,000 crore over the next five years. INVITs are pass through SPVs which hold a diversified portfolio of infrastructure assets and pass on regular income benefits and the sale profits to investors via distribution. They are useful for large infrastructure projects to separate asset ownership from asset operation and enhance Return on Investment (ROI). INVIT issues are expected in sectors like roads, telecom fibre, power generation and power transmission. You are right that major challenge post budget 2020 is to manage the impact of dividend tax. With dividends being taxed in the hands of the investor as other income, the income from INVITs also becomes taxable, dampening their demand in the market.

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