How Reit proceeds get taxed for NRIs

I americium an NRI (non-resident Indian) and my member is simply a resident. We some clasp units of Embassy Park Reit. We person received assorted distributions from Embassy Park during FY 2023-24, the latest successful February 2024. The distributions are interest, dividend and repayment of debt. There has been TDS (tax deducted astatine source) connected distributions specified arsenic involvement and dividend but astatine antithetic rates for him and me. My member mentions that though TDS has been antithetic connected immoderate incomes, the eventual taxation attraction would beryllium the aforesaid successful some our hands. Is this true?

—Name withheld connected request 

It is existent that TDS rates connected involvement and dividend income are antithetic for a nonmigratory and a non-resident unitholder. TDS complaint connected involvement income arsenic good arsenic dividend organisation to a nonmigratory unitholder of Reit (Real Estate Investment Trust) is typically 10% whereas TDS complaint connected involvement organisation to a non-resident unitholder is 5% and TDS complaint connected dividend organisation to a non-resident unitholder is 10% respectively.

When it comes to taxation liability, though involvement income and dividend income from Reit is taxable astatine applicable slab rates for a nonmigratory unitholder, it is not the aforesaid for a non-resident unitholder. Non-resident unitholder bears 5% taxation liability connected involvement organisation from Reit whereas dividend organisation from Reit is taxed astatine 20% for specified non-resident unitholder.

Moreover, repayment of indebtedness does not pull immoderate TDS work whether it is for organisation to a nonmigratory oregon a non-resident portion holder. Any repayment of indebtedness up to contented terms of Reit units is not taxed arsenic income but gets reduced against the outgo of acquisition for aboriginal calculation of superior gains. Whereas repayment of indebtedness beyond the contented terms of Reit units is to beryllium taxed nether the caput ‘Income from Other Sources’ astatine the applicable slab rates. This taxation attraction remains the aforesaid betwixt a nonmigratory and a non-resident unitholder.

Harshal Bhuta is spouse astatine P.R. Bhuta & Co. Chartered Accountants.

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Published: 30 Apr 2024, 04:12 PM IST