Question
Consider the following statements:
Statements - I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statements - 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?
(a) Both Statement - I and Statement - II are correct and Statement - II is the correct explanation for Statement - I
(b) Both Statement - I and Statement - II are correct and Statement - II is not the correct explanation for Statement - I
(c) Statement -I is correct but Statement - II is incorrect
(d) Statement - I is incorrect but Statement - II is correct
Answer:
D
To suggest corrections, send feedback using feedback button in top menu.
To suggest corrections, use feedback icon on top menu.
Explanation:
Statement 1 is incorrect: InvITs are investment vehicles that pool funds from investors to invest in infrastructure projects. Under the latest budget, all income distributed by InvITs, including interest income, dividend income, and rental income, is taxable in the hands of the investors. The income from deposits in InvITs is subject to taxation at the investor's marginal income tax rate. Therefore, the interest income from InvITs is not exempted from tax, contrary to Statement 1.
Statement 2 is correct: InvITs are recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). This act provides a legal framework for the securitization of financial assets and enables the enforcement of security interests in case of default.