The Taxation and Other Laws (Amendment) Act, 2026 (“TOLA 2026”) which was passed on 17 August 2026, has been celebrated as a fix for a long-running tax anomaly regarding dividend income for unit holders from REITs and InvITs, also known as BTs.
A BT holds its rent or cash yielding assets either directly or indirectly through Special Purpose Vehicles (SPVs) or through an intermediate holding company which in turn owns the SPVs. Apart from offering pass-through treatment, these structures also benefitted from a regime under which dividend income was entirely exempt from taxation since 2016, making them commercially and fiscally efficient investment vehicles.
