How InvITs Works & Returns Generated.
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Investors in an InvIT become part owners of its operating assets such as toll roads or power transmissions lines , while in a stock IPO, they get to part-OWN the underlying business.
The government of India too is increasingly using the InvIT route held by government entities, and bring broad-based public shareholding.
InvIT list on the bourses to raise money to acquire a portfolio of infrastructure assets that are already running and generating cashflows.
InvITs may earn their returns from assets they own in three forms. One ,if the INvIT's hold assets on its won balance sheet, it may earn income from toll collections, power transmission fees or other avenues, which, after meeting expenses ,is distributed to share holders.
The capital gains you make on trading InvIT's units on exchanges are treated as short term and taxed as 15% if held for less than 36 months , and taxed at 10% if held beyond this period.