How can we report income from real estate investment trusts (Reits) and infrastructure investment trusts (Invits) in the income tax return (ITR)? Also, how do we fill up Schedule FA (foreign assets) for Restricted Stock Units (RSUs) of the same company (as in the case of Amazon) awarded over multiple years? Should they be aggregated or reported separately each year?
—Name withheld on request
The income from Reits and Invits (collectively referred to as ‘business trusts’) are accorded the status of pass-through income (PTI). Any income distributed by a business trust to its unitholders is deemed to be of the same nature and in the same proportion as it had been received by or accrued to the business trust.
The reporting of PTI is required to be done by the unitholder under the Schedule PTI of ITR 2 (as notified for FY23-24) along with the reporting under the schedule for the respective heads of income, depending on the nature of income. For e.g., in case the nature of income accrued in hands of the vusiness trust is that of short-term capital cain, such income would be required to be reported by the unit holder in Schedule CG – Pass Through Income/ Loss in the nature of Short-Term Capital Gains and in Schedule PTI. Any exempt income would be required to be reported under schedule PTI, along with Schedule EI (Exempt Income). Any tax deducted at source against the income should be reported in the respective TDS schedule of ITR-2.
Reporting of RSUs in Schedule FA depends on the stage of vesting. Typically, shares against the RSUs are allotted immediately upon vesting of the units.
In case RSUs are only awarded but not vested, the same shall not be considered as an asset until the units are vested, and hence not required to be reported under the Schedule FA of the ITR form till vesting. In cases where RSUs have vested/ shares are allotted against the RSU awards, the same is required to be reported at cost in Schedule FA of the ITR -2. As the date of acquisition is required to be reported here, thus vested RSUs/ shares will need to be reported based on the individual dates of allotment and not on an aggregate basis.
Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.
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Published: 12 May 2024, 04:55 PM IST