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?

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I

Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I

Statement-I is correct but Statement-II is incorrect

Statement-I is incorrect but Statement-II is correct

APEDIA

UPSC Prelims

2023 • 28 May, 2023 • Paper-1

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?

Correct Answer

Statement-I is incorrect but Statement-II is correct

Subject: Economy.Context: Infrastructure Investment Trusts (InvITs).Details: Statement I is incorrect; generally, interest income received by InvIT investors is......

💡 Analysis & Explanation

Subject ▼

Economy.

Context ▼

Infrastructure Investment Trusts (InvITs).

Details ▼

Statement I is incorrect; generally, interest income received by InvIT investors is taxable in their hands, while dividend income can be tax-exempt under specific conditions (if the SPV hasn't opted for the new concessional tax regime). Statement II is correct; InvITs have been notified as 'borrowers' under the SARFAESI Act, enabling lenders to invoke provisions for loan recovery.

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