Infrastructure trusts — roads, power transmission, pipelines. 8-12% distribution yield (higher than REITs). 90% income distribution. Concession expiry + asset depletion risk.
InvIT = Infrastructure Investment Trust. Invests in INCOME-PRODUCING INFRASTRUCTURE. LISTED INDIAN InvITs: (1) IRB InvIT (roads/highways). (2) IndiGrid (power transmission). (3) PowerGrid InvIT (transmission). (4) India Grid. ASSETS: toll roads, power transmission lines, gas pipelines, telecom towers. KEY: (1) 90% income distributed. (2) Listed on NSE/BSE. (3) 8-12% distribution yield (higher than REITs). (4) Long-term concession assets. STRATEGIC: infrastructure income exposure for retail investors.
InvIT TAX (similar to REIT, 3 components): (1) INTEREST income: TAXABLE at slab. (2) DIVIDEND: tax-free if SPV pays full corporate tax (else taxable). (3) CAPITAL REPAYMENT: reduces cost basis. CAPITAL GAINS on units: (1) LTCG 12.5% above ₹1.25L (1+ year). (2) STCG 20% (under 1 year). InvIT provides component breakup. STRATEGIC: interest-heavy distributions taxable. Track components for ITR. Similar mixed taxation to REITs.
InvIT vs REIT: InvIT: (1) INFRASTRUCTURE (roads, power, pipelines). (2) Higher yield 8-12%. (3) Long concession periods. (4) Regulated tariffs (stable cash flow). (5) Asset DEPRECIATION over concession. REIT: (1) Commercial REAL ESTATE (offices, malls). (2) Yield 6-8%. (3) Property appreciation potential. (4) Perpetual assets. STRATEGIC: (a) InvIT: higher income, stable (regulated), but asset depletes (concession ends). (b) REIT: lower income, appreciation potential, perpetual. Mix both for diversification.
InvIT RISKS: (1) CONCESSION EXPIRY: toll roads/transmission have finite concession periods — asset value declines. (2) INTEREST RATE sensitivity (like bonds). (3) REGULATORY (tariff revisions). (4) TRAFFIC/USAGE risk (roads). (5) COUNTERPARTY (government/utility payments). (6) LEVERAGE (InvITs use debt). MITIGATION: (1) Diversified asset portfolio. (2) Acquiring new assets (replenish). (3) Regulated stable cash flows. STRATEGIC: understand concession timelines + asset replenishment strategy. Distribution may include capital return (asset depletion).
InvIT STRATEGY: (1) 5-10% portfolio for infrastructure income. (2) HIGH YIELD 8-12% (income-focused). (3) DIVERSIFY: roads (IRB) + power (IndiGrid/PowerGrid). (4) TAX: track 3 components (interest taxable). (5) CONCESSION timelines + asset replenishment critical. (6) BUY on exchange (demat). (7) INTEREST RATE sensitivity. (8) REGULATED utilities (PowerGrid) more stable than toll roads (traffic risk). (9) LTCG 12.5% after 1 year. (10) COMPARE distribution yield + asset quality + leverage. STRATEGIC: InvITs for high current income from infrastructure. Suit income-seeking + retiree portfolios. Higher yield than REITs but asset depletion risk.