Retail and small investors will get an opportunity to invest in road projects that have been completed initially. This will happen through InvITs. In this, a provision of fixed return of 8 percent will be made on the minimum investment of Rs 1 lakh. Sovereign guarantee will be given on this return. This will keep the investment of small investors safe.
New Delhi. The Union Ministry of Road Transport and Highways is planning to issue 10 Public Infra Investment Trusts (InvITs) to raise funds for road projects. The National Highways Authority of India (NHAI) is seriously considering opening InvITs to retail investors. Till now all the InvITs related to the road sector have been in the form of private trusts. In such a situation, SEBI approval will be required to bring investment of retail investors in these proposed InvITs.
According to a Moneycontrol report, Union Road Transport and Highways Minister Nitin Gadkari told in an interview to Mint that about 10 Public Infra Investment Trusts (InvITs) of different categories will be issued for road projects in different sectors. The first such project can start in the next 1 month. Gadkari says that through this money will be raised from the general public for the highway development program of India.
Opportunity for small investors
Retail and small investors will get an opportunity to invest in road projects that have been completed initially. This will happen through InvITs. In this, a provision of fixed return of 8 percent will be made on the minimum investment of Rs 1 lakh. Sovereign guarantee will be given on this return. This will keep the investment of small investors safe. Talking to Moneycontrol, a senior official said that the National Highways Authority of India (NHAI) plans to open its upcoming InvITs to retail investors. Apart from this, there are plans to raise capital through InvITs in Toll-Operate-Transfer (TOT) projects. NHAI, the central government and SEBI are also considering a fixed return structure in InvITs for retail investors.
Also consider tax exemption
NHAI is also demanding tax exemption on InvITs investment from the government to make these InvITs more attractive to retail and foreign institutional investors. As per the current tax rules, an investor investing in InvITs has to pay short term capital gain on the profit earned on selling units of InvITs within 3 years of purchase. If the units of InvITs are sold after 3 years and the gains exceed Rs 1 lakh, then long term capital gains tax at the rate of 10 per cent is liable to be paid.
What are InvITs?
Infrastructure Investment Trusts (InvITs) are like mutual funds, through which potential individual/institutional investors in infrastructure can invest small amounts directly to earn a small portion of the income in the form of returns. InvITs work like mutual funds or real estate investment trusts.
