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Business Trusts may invest in a number of Holding companies/ SPVs and it is likely that there may be surplus funds available in one Holding company/ SPV which can be productively lent to another Holding company/ SPV.  Considering provisions of Section 2(22)(e), such loans may have adverse tax implications.  Provisions of Section 2(22)(e) do not apply to a listed company or its subsidiary.  Since units of a Business Trust shall be listed and the Holding company/ SPV is its subsidiary, exemption from Section 2(22)(e) should be available to such Holding companies/ SPVs as they are available to a listed company or its subsidiary. 

The Finance Bill 2020 proposes to levy tax on the dividend paid by InvITs/ REITs to the unitholders in the hands of the unitholders, which was until this proposed amendment exempt from tax. An efficient tax structure provided under the Income Tax Act 1961 enabled the successful listing of two InvITs in 2017, two privately placed but listed InvITs and India’s first REIT in April 2019 which attracted investment from large long-term foreign investors and also domestic institutional investors. 

We hereby state that pursuant to declaration of COVID-19 as a ‘Pandemic’ by the World Health Organisation (WHO), Government Of India (GOI) has invoked the provisions of Section 2 of the Epidemic Disease Act, 1897 in order to curb the spread of COVID-19. Further, as a precautionary measure, as required to arrest the spread, various State Governments have ordered complete shut-down of shopping centres, malls, multiplexes/cinema halls, hotels, industrial and warehouse parks  and  private / corporate offices except those providing essential services from March 20, 2020 onwards. This has been further extended due to complete lockdown by Central Government across India until Mid April, 2020, with a possibility of further extension as exact time frame for controlling this Pandemic cannot be defined. 
 

Over the past 2 months, COVID 19 has progressed from a regional outbreak to an acclaimed pandemic. This has created havoc not only in the day to day lives of people but also in terms of the business operations of all scales.  With a view to curb further contagion, Governments across nations have issued travel advisories and have imposed restrictions, besides localised measures like shut-down of malls, multiplexes/cinema halls, large gatherings etc., to name a few. 

The income tax framework for Business Trusts (BTs) was first introduced in Finance (No. 2) Act, 2014.  Further amendments were undertaken in Finance Act, 2015 and Finance Act, 2016.  The key principle that underpinned this framework was to provide for a single level of taxation on income from the underlying assets – this tax was to be assessed on the asset owning SPV’s income; thereafter, such income when distributed by the SPV to the BTs and by the BTs to its unitholders, would not attract any further tax. 

Over the past 2 months, COVID 19 has progressed from a regional outbreak to a pandemic. This has created havoc not only in the day to day lives of people but also in terms of the business operations of all scales.  Real Estate industry which was already reeling under the slowdown pressures is now staring at a complete shutdown. Even big business houses which have the ability to sustain this, are now creating reserves for the rainy day, with no visibility of the end of this phase. The employment and livelihood of the real estate workers at every level have also been adversely impacted due to the sudden slowdown of real estate construction.