InvestorQ : What is the dividend tax issue for REITs and does the FM need to clarify on this subject?
Lavanya Subramanian made post

What is the dividend tax issue for REITs and does the FM need to clarify on this subject?

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ishika Banerjee answered.
8 months ago
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Budget 2020 abolished DDT on dividends and shifted the onus on the investors. This created a piquant situation for the REITs as they would automatically become subjected to tax at the extant rates. That means for a high net worth investor subjected to tax at the rate of 42.7%, the dividends from REITs would be taxed at the relevant rates. That is where the FM needs to clarity. The idea situation will be if the FM can clarify and remove the dividend tax on pass-through instruments explicitly. That includes dividend tax on mutual funds, REITs and INVITs. In such cases, the cascading effect of taxes makes it unviable. REITs and INVITs are still too young to be stifled by the cascading effect of taxes.

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