Economics · Economy
In the context of the operational framework of Infrastructure Investment Trusts (InvITs) in India, what is the mandatory requirement regarding the distribution of net distributable cash flows to the unit holders, and how does it impact the tax pass-through status for the investors?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1For privately placed InvITs, the distribution must happen on an annual basis, and the amount must be at least 50% of the total income generated from the Special Purpose Vehicles.
- 2The distribution is optional and depends on the discretion of the Board of Directors of the Sponsor company, provided the InvIT maintains a Debt to Equity ratio of less than 2:1.
- 3The InvIT is required to distribute at least 90% of the net distributable cash flows to the unit holders at least once every six months for a publicly offered InvIT.✓
- 4The Investment Manager must distribute at least 70% of the net distributable cash flows of the InvIT to the unit holders every quarter to maintain its status as a public trust.
Correct answer
The InvIT is required to distribute at least 90% of the net distributable cash flows to the unit holders at least once every six months for a publicly offered InvIT.
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