How can we report income from real estate investment trusts (Reits) and infrastructure investment trusts (Invits) in our income tax return (ITR)? Also, how do I complete Schedule FA (foreign assets) for restricted stock units (RSUs) from the same company (like Amazon) granted for multiple years? Should they be added together or reported separately each year?
— Name withheld upon request
Income from Reits and Invits (collectively called ‘business trusts’) has the status of transferred income (PTI). Any income paid by a business trust to its unitholders is deemed to be of the same kind and in the same proportion as received by or accrued to the business trust.
Reporting of PTI is required by the unit holder as per PTI Schedule of ITR 2 (notified for FY23-24) along with reporting as per schedule for relevant head of principal income, depending on the nature of income. For example, in case the income accumulated in the hands of the trust is in the nature of low term capital, the unit holder will have to report such income in Schedule CG – Income/Loss Passed As Low Term Capital Gains and Schedule PTI. Any tax-exempt income will have to be reported under Schedule PTI along with Schedule EI (Exempt Income). Any taxes deducted at source on the income must be reported in the appropriate TDS Schedule ITR-2.
Reporting RSUs on Schedule FA depends on the vesting stage. Typically, shares in exchange for RSUs are allocated immediately after the units vest.
Where RSUs are granted but not vested, they will not be considered an asset until vesting and therefore will not be required to be reported under Schedule FA of Form ITR until vesting. In cases where RSUs have vested/shares have been allotted in exchange for RSU awards, this should be reported at cost in Schedule FA to ITR -2. Because a vesting date is required here, vested RSUs/shares will need to be reported on an individual grant date basis rather than in the aggregate.
Parizad Sirwalla is Partner and Head of Global Mobile Services, Tax, KPMG in India.
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Posted: May 12, 2024 16:55 EST
