How to report income from REITs and InVITs in ITR for AY 2026-27

Investing in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) has become increasingly popular among investors. However, when it comes to filing an income tax return (ITR), many investors are unsure about how to report the income received from these investments in their ITR.

The confusion arises because the amount credited from payouts from REITs and InvITs to an investor may include interest, dividend, rental income, or repayment of capital. Each component can have different income tax implications.

Which ITR form should REIT/InvIT investors use?

The ITR form depends on an investor’s overall income profile and not merely on the fact that they hold REIT or InvIT units.

"Most investors who only receive REIT/InvIT payouts like interest and dividend can file ITR-1 if they meet the eligibility conditions. However, if they sell REIT/InvIT units and have capital gains, they generally need to file ITR-2," said CA Abhishek Soni, CEO and Co-founder, Tax2win.

This form can be used to report investment-related income, including capital gains arising from the sale of units.

Before selecting the ITR form, taxpayers should review their complete income details for the financial year.

CA Abhishek Soni said that if you earn income from REITs or InvITs, you must report it in your ITR based on the type of income you receive.

• Report dividend income and interest income under 'Income from Other Sources'. These are usually taxed according to your income tax slab.

• If you sell REIT or InvIT units, report the profit or loss under the 'Capital Gains' schedule. The tax depends on how long you held the units.

• If you receive any tax-exempt distribution, report it under the 'Exempt Income' schedule.

Documents to keep before filing ITR

Before filing their return, REIT and InvIT investors should keep the following documents handy:

• REIT/InvIT distribution statement

• Broker statements

• AIS (Annual Information Statement)

• Form 26AS

• Purchase and sale details of units

• Bank statements showing receipts

What are REITs and InvITs?

REITs and InvITs allow investors to participate in income-generating real estate and infrastructure assets without directly owning them.

In these investment vehicles, money collected from investors is pooled at the trust level and invested through Special Purpose Vehicles (SPVs), which own and operate the underlying assets.

REITs primarily invest in commercial real estate assets such as office spaces and malls, while InvITs focus on infrastructure assets, including roads, power transmission networks, and renewable energy projects.

Taxation of REITs and InvITs

The tax treatment depends on the type of income distributed to the investor.

“Interest income is taxed according to the investor’s applicable income tax slab. Rental income and dividend components from REITs may also have specific tax treatment depending on the applicable provisions. If an investor sells REIT or InvIT units, the gains are taxed under capital gains provisions,” said CA Abhishek Soni, CEO and Co-founder, Tax2win.

How are dividends from REITs and InvITs taxed?

For resident investors, dividend income received from REITs and InvITs is taxable as per the applicable tax provisions. Interest expenditure incurred to earn such dividend income may be allowed subject to prescribed limits.

For non-resident investors, taxation may depend on applicable provisions, including the Double Taxation Avoidance Agreement (DTAA), wherever applicable.

Check these details before filing your ITR

Before submitting their ITR for AY 2026-27, investors should carefully review the distribution statement provided by the REIT or InvIT. The income should be reported based on the nature of the distribution received and matched with details available in AIS and Form 26AS.