HNIs: Options galore
There are few prospects for the high net worth individuals (HNIs) from this Budget which could work in their favour if they play these well. A peep into some of them shows opportunity for HNIs.
Boost for REITs
To facilitate investments in Real Estate Investment Trusts, any distribution made out of income of SPV to the REITs and Infrastructure Investment Trust (INVITs) having specified shareholding will not be subjected to Dividend Distribution Tax. This is expected to give rise to investments in real estate sector.
ARC: A new investment opportunity
The government has also proposed to make necessary amendments to the SARFAESI Act 2002 to enable the sponsor of an Asset Reconstruction Company (ARC) to hold up to 100 per cent stake in the ARC and permit non-institutional investors to invest in Securitization Receipts. Earlier, only institutional investors had access to the market of distressed asset which has grown significantly in last 2 to 3 years with ARC’s buying more than Rs. 21,000 crore in the last fiscal year. This proposal gives a new investment option to HNIs which is also beneficial from taxation point of view as there is a complete pass through of income-tax to trusts of ARCs which means that the income will be taxed in the hands of the investors instead of the trust.
Unlisted space
Given the increasing investment rate in private space, the period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years. This is an attractive proposal for investors looking to invest in private companies via PE/VC.
On the flipside, in addition to dividend distribution tax (DDT) paid by the companies, tax at the rate of 10 per cent of gross amount of dividend will be payable by the recipients, receiving dividend in excess of Rs.10 lakh per annum.