UPSC CSE Prelims
Question 6
Consider the following statements :
Statement-I : Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II : InvITs are recognized as borrowers under the 'Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'.
Which one of the following is correct in respect of the above statements?
View correct answer and explanation
Correct answer: D
Correct Option: D (Statement-I is incorrect but Statement-II is correct)
Explanation: InvIT interest distributed to unitholders is generally taxable rather than blanket-exempt; InvITs were recognized as borrowers for SARFAESI enforcement purposes.
Statement / Pair / Item-wise Analysis:
I. Incorrect/False - Interest income passed through from an InvIT to investors is not generally exempt; dividend taxation depends on applicable rules.
II. Correct/True - SARFAESI treatment was extended to InvITs/REITs as eligible borrowers, enabling security enforcement.
Option-wise Analysis:
A. Incorrect-Statement I is false: Interest income passed through from an InvIT to investors is not generally exempt; dividend taxation depends on applicable rules.
B. Incorrect-Statement I is false: Interest income passed through from an InvIT to investors is not generally exempt; dividend taxation depends on applicable rules.
C. Incorrect-Statement I is false: Interest income passed through from an InvIT to investors is not generally exempt; dividend taxation depends on applicable rules.
D. Correct-Statement I is false and Statement II is true.