25% SPV surcharge dampens REIT, InvIT tax reform gains; industry seeks relief

A 25% surcharge on special purpose vehicles (SPVs) is expected to create headwinds for the real estate investment trust and infrastructure investment trust sectors, even as recent tax reforms were welcomed by the industry.

The levy is likely to constrain dividend distributions in the near term, market participants said. Industry bodies are now seeking either a rollback or significant reduction in the surcharge to offset the negative impact of the new tax measure.

Experts believe the burden on SPV structures used by REITs and InvITs could undermine the benefits of the broader tax overhaul announced for these investment vehicles.