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1 A. BUSINESS TRUSTS – CONCEPT and NEED1. HISTORY & INTRODUCTION OF LAW IN THE INCOME TAX ACT.a) HISTORY: Taxation regime introduced by the Finance (No. Sec A.mp4 2) Act, 2014 for REITS and InVITS The Finance Minister, in his speech introducing the Finance (No. 2) Bill, 2014 in Lok Sabha,:\"Real Estate Investment Trusts (REITS) have been successfully used asinstruments for pooling of investment in several countries. I intend to providenecessary incentives for REITS which will have pass through for the purposeof taxation.As an innovation, a modified REITS type structure for infrastructure projectsis also being announced as Infrastructure Investment Trusts (InVITs), whichwould have a similar tax efficient pass through status, for PPP and otherinfrastructure projects.These structures would reduce the pressure on the banking system whilealso making available fresh equity. I am confident these two instrumentswould attract long term finance from foreign and domestic sources includingthe NRIs.\"b) INTRODUCTION IN INCOME TAXT ACT: Chapter XII-FA, consisting of section 115UA, has been inserted in the Act, with effect from 1-4-2015, which deals with \"Special Provisions Relating to Business Trusts” .2. BUSINESS TRUST : DEFINITION AND TYPESa) Definition [Sec 2(13A)]: Business trust refers to a trust registered as  an Infrastructure Investment Trust [InVIT]; or  a Real Estate Investment Trust [REIT] in accordance with the regulations made under the Securities and Exchange Board of India Act,1992 and notified by the Central Government in this behalf and the units of which are required to be listed on RSE (Recognised Stock Exchange)

2BUSINESS TRUST REIT InVITReal Estate Investment Trust Infrastructure Investment Trustb) FEATURES i. It is an investment vehicle for investment in Real estate and infrastructure sector. ii. Allow small investors access to large income producing real estate assets much like how mutual funds provide access to stocks. iii. The investor will be issued units from Business Trust in lieu of the investment. iv. The funds can be raised from a resident as well as a non resident by way of issue of units or by way of debt. v. A business trust is managed by professional managers.c) TYPES Real Estate Investment Trusts (REIT) i. A real estate investment trust (REIT) will be required to own and operate - income-producing real estate or real estate-related assets. a. The income-producing real estate assets owned by a REIT may include office buildings, shopping malls, apartments, hotels, resorts, self- storage facilities, warehouses and mortgages or loans. b. Most REITs specialize in a single type of real estate - for example, apartment communities. There are retail REITs, office REITs, residential REITs, healthcare REITs, and industrial REITs, to name a few ii. REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership - without actually having to go out and buy commercial real estate.

3iii. The minimum subscription size and trading lot for REIT shall be Rs. 2 lakhs.iv. To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 per cent of its taxable income to shareholders annually in the form of dividendsv. REITs bring in transparency and accountability in the real estate sector.vi. Parties to REIT- Trustee(s), Sponsor(s) and Manager(s). Infrastructure Investment Trust (invit) i. InVITs are a Business Trust a suitable structure for financing/refinancing of infrastructure projects in the country.ii. InVITs shall invest in infrastructure projects, either directly or through SPV (Special Purpose Vehicle).iii. An InVIT a. Must invest at least 80% of the value of the assets in the completed and revenue generating Infrastructure assets, Rest 20% may be invested in under construction infrastructure projects (subject to maximum of 10%) and other permissible investments.

4 b. shall raise funds only through public issue of units and c. minimum subscription size and trading lot for such InvIT shall be Rs. 10 lakhs. d. An InVIT which proposes to invest more than 10% of the value of their assets in under construction infrastructure projects shall necessarily raise funds through private placement from Qualified Institutional Buyers and body corporate and the minimum investment and trading lot for such InVITs shall be of Rs. 1 crore.iv. Listing shall be mandatory for both publicly offered and privately placed InVITsv. Parties to Invit - Sponsor(s), Investment Manager, Trustee and Project Manager(s). Topic Index Next topic