Economy2023
Consider the following statements: Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable. Statement-II: InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002”. Which one of the following is correct in respect of the above statements?
Explanation
Statement-I is incorrect because income from InvITs is generally subject to tax, with dividends from InvITs being tax-exempt for investors under certain conditions. Meanwhile, Statement-II is correct as InvITs are indeed recognized as a type of borrower under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which facilitates the restructuring of financial assets and enhances liquidity in the market. This distinction highlights the regulatory framework governing InvITs and their financial instruments within the Indian economy.