Answer

1. F

   Facts

   REITs must distribute at least 90% of distributable cash flows. These distributions come in three components with different tax treatment:

2. P

   Provisions and law

   • IT Act, Sec 10(23FC) (now 11), 10(23FCA), 115UA | SEBI REIT Reg 2014
3. A

   Analysis

   1. Interest income distributed: Taxable in investor's hands at slab rate. Most REIT distributions are this component. REITs invest in SPVs as debt, interest flows up. 2. Dividend from SPV: Tax-free if SPV has paid DDT (old regime). Under new regime: taxable as dividend at slab rate. Check which regime the SPV operates under. 3. Capital gains: Passed through as capital gains at 12.5% (LTCG, if REIT units held 36+ months) or 20% (STCG, less than 36 months). Return of capital: Some portion may be return of capital, not taxable, but reduces cost basis for future gains calculation.

4. C

   Conclusion

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