REIT & InvIT Tax Calculator: Quarterly Dividend Tax

REIT Holding & Distribution Breakup

Number of REIT Units Owned

Dividend Per Unit (₹)

Interest Per Unit (₹)

Rental Income Per Unit (₹)

Capital Repayment (₹)

Your Income Tax Slab Rate (%)

REIT & InvIT Tax Framework in India (2026)

Real Estate Investment Trusts (REITs) pass through income to unitholders with specific component taxability under Section 115UA of the Income Tax Act:

Payout Component	Taxability Rule (Unitholder)	TDS under Sec 194LBA
Dividend Component	100% Tax-Free (if SPV did not opt for Sec 115BAA)	Nil TDS
Interest Component	Taxable at Investor's Income Tax Slab Rate	10% TDS Deducted
Rental Income Component	Taxable at Investor's Income Tax Slab Rate	10% TDS Deducted
Repayment of Debt	Taxed as Other Sources if total exceeds issue price	Nil TDS

Key Benefits of REIT Investing

Commercial Property Exposure for ₹300: Access Grade-A commercial IT parks without buying multi-crore real estate.
Quarterly Cashflow Yield: SEBI mandates 90% net cash distribution to unitholders quarterly.
Inflation-Hedged Growth: Commercial lease escalations (15% every 3 years) compound unit valuations.

Limitations & Tax Risk Factors (2026)

High Tax Burden for 30% Slab: Interest & Rental components are taxed at peak slab rates, reducing net yield for high earners.
Market Price Volatility: REIT unit prices fluctuate on stock exchanges based on RBI interest rate cycles.

REIT Tax Optimization Strategy

Check your quarterly REIT tax breakup statement in Form 26AS. If your total income is below basic exemption, claim full TDS refund under Section 194LBA by filing your annual ITR.

Frequently Asked Questions

How are REIT distributions taxed in India?

REIT payouts are split into 4 components under Section 115UA: Dividend (exempt if SPV opted for Sec 115BAA), Interest (taxable at unitholder slab rate), Rental Income (taxable at slab rate), and Repayment of Debt (taxable as Other Sources if cumulative repayment exceeds issue price).

What is Section 194LBA TDS on REIT payouts?

Under Section 194LBA, REIT Business Trusts deduct 10% TDS on the Interest and Rental Income components distributed to resident unitholders.

Is REIT dividend payout tax-free?

Dividends distributed by REITs are 100% tax-free in the hands of unitholders if the Special Purpose Vehicle (SPV) has NOT exercised the concessional 22% tax rate option under Section 115BAA.

What is the new Repayment of Capital tax rule introduced in Finance Act 2026?

Repayment of debt/capital distributions exceeding the original issue price of the REIT unit are taxed as 'Income from Other Sources' under Section 56(2)(xii).

How are capital gains taxed when selling REIT units on stock exchanges?

STCG (held ≤ 12 months) is taxed at 20%. LTCG (held > 12 months) is taxed at 12.5% on gains exceeding ₹1.25 Lakhs per financial year.

Which REITs operate in India?

Major SEBI-registered REITs in India include Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust, and Nexus Select Trust (Retail REIT).

What is the quarterly distribution frequency for REITs?

SEBI mandates that REITs must distribute at least 90% of their net distributable cash flows (NDCF) to unitholders at least once every quarter.

Where can I find the tax component breakdown of my REIT payout?

REIT managers publish a detailed tax breakup statement on exchange filings and issue Form 16A TDS certificates quarterly.

REIT & InvIT Tax Calculator (2026)