IndiaFilings / Learn / Personal Finance / Infrastructure Investment Trust Invit
Infrastructure Investment Trust (InvIT) - IndiaFilings

Infrastructure Investment Trust (InvIT)

An Infrastructure Investment Trust (InvIT) is an Investment Scheme similar to a mutual fund, which authorizes the direct investment of money from several individuals and institutional investors in infrastructure projects to earn a small portion of the income as a return. The InvITs are regulated by the SEBI Infrastructure Investment Trusts Regulations, 2014. InvIT can invest in infrastructure projects, either directly or through a special purpose vehicle (SPV). In the case of Public-Private Partnership (PPP) projects, the investments should be made through SPV. In this article; we will look at the Infrastructure Investment Trusts (InvIT) in detail.

Advantages of InvIT

The benefit of InvIT is explained in detail below:
  • InvITs is proposed to provide a suitable structure for financing or refinancing of infrastructure projects in the country.
  • InvIT is providing wider and long-term re-finance for existing infrastructure projects
  • InvIT is freeing up of the current developer’s capital for reinvestment into new infrastructure projects.
  • Refinancing the existing high-cost debt with long-term low-cost capital and help banks to reduce loan exposure
  • InvIT is attracting international finance into the Indian infrastructure sector.
  • InvITs will enable investors to hold a diversified portfolio of infrastructure assets.
  • InvITs are also proposed to bring higher standards of governance into infrastructure development and management and distribution of income from assets to attract investor interest.

Types of InvITs

The Infrastructure Investment Trusts (InvITs) is set up as a trust and registered with SEBI. The InvITs is classified into two types as follows:
  • One type of InviTs is allowed the investor to invest mainly in completed and revenue-generating infrastructure projects
  • Another type of InviTs has the flexibility to invest in completed or under-construction infrastructure projects.
The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the infrastructure projects either directly or via special purpose vehicles (SPVs).

Structure of InvIT

An InvIT has four parties such as Trustee, Sponsor, Investment Manager and Project Manager.

Trustee

A trustee is a person who holds the InvIT assets in trust for the benefit of the unitholders.

Sponsor

  • Sponsor means any company or Limited Liability Partnership firm or body corporate with a net worth of Rs. 100 crore which sets up the InvIT and is designated at the time of application made to the Board
  • In the case of Public-Private Partnership projects, it refers to the infrastructure developer or a special purpose vehicle holding concession agreement.

Promoters or Sponsors

  • Promoters or Sponsors have to hold at least 25% in the InvITs for at least 3 years, except for the cases where a regulatory requirement/ concession agreement requires the sponsor to hold a certain minimum per cent in the underlying SPV.
  • In such cases, the consolidated value of sponsor holding in the underlying SPV and the InvITs cannot be less than 25% of the value of units of InvITs on a post-issue basis.

Investment Manager

Investment Manager is referred to a company or Limited Liability Partnership (LLP) or body corporate which manages assets and investments of the InvIT and guarantees activities of the InvIT.

Project Manager

Project manager refers to the person designated as the project manager by the InvIT, the project manager is responsible for achieving execution of the project and in case of PPP projects, it indicates that the entity responsible for such execution and achievement of project milestones following the concession agreement or any other relevant project document.

Eligibility to Invest

The minimum investment amount is Rs.10 lakh. InvITs are listed on exchanges just like stocks. After listing, the investment amount is Rs.5 lakh. The following persons can invest in InvIT:
  • High net worth individuals
  • Institutional and non-institutional investors like foreign portfolio investors, pension funds, mutual funds, banks and insurance firms.

Benefit to Investors  

There are certain rules that the InvIT issuers have to follow designed to safeguard the investor.
  • The sponsor has to hold a minimum of 15 % of the InvIT units with a lock-in period of three years.
  • InvIT has to distribute 90 % of its net cash flows to investors.
The trust is required to invest a minimum of 80 % in revenue-generating infra assets. Only the rest amount can be used for under-construction assets. Dividends from the InvIT trust will be distributed to the investor depending on its cash flow and there is no dividend distribution tax on InvIT units. Tax Benefit Government is providing an exemption from dividend distribution tax and relaxation of capital gains tax for InvIT.
  • The dividend income that is distributed by the trusts is exempted from tax.
  • The central government has exempted long-term capital gain tax in InvIT if the security is held for over 3 years. Capital gain tax is applicable only if the investors pay securities transaction tax (STT).
  • If an investor exits an InvIT before three years, a Short-term capital gain tax 15% is applicable.

Eligibility Criteria to Get Registration Certificate

To get the registration certificate, the following conditions should be full fill by the applicant. The SEBI will consider all matters relevant to the activities as an InvIT.

Regarding sponsor

  • The sponsor and the instrument of trust should be registered in India under the provisions of the Registration Act, 1908.
  • The sponsor (Corporate or Company) should have a net worth of Rs.100 crore for registering Infrastructure project as InvIT.
  • In case a sponsor is a limited liability partnership firms the net tangible assets should be Rs.10 core to get the certificate.
  • For getting a certificate of registration, the sponsor or its associate should have a soundtrack record in the development of infrastructure or fund management in the infrastructure sector.

Regarding Investment Manager

  • The Investment Manager (Corporate or Company) should have a net worth of Rs.10 crore for registering Infrastructure project as InvIT.
  • In case an Investment Manager is a limited liability partnership firms the net tangible assets should be Rs.100 core to get the certificate.
  • The investment manager should have five years of experience in fund management or advisory services development in the infrastructure sector
  • The investment manager should have more than two employees who have at least five years experience each, in fund management or advisory services or development in the infrastructure sector
  • The investment manager should have at least one employee who has at least five years experience in the relevant sub-sectors in which the InvIT has invested or proposes to invest
  • the investment manager should have an office in India from where the operations of the InvIT is proposed to be conducted
  • The investment manager should be entered into an investment management agreement with the trustee

Regarding Trustee

The trustee should be registered with the Board under Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993

Fee Details

The fee details for registering Infrastructure Investment Trusts (InvITs) are explained in detail below: Registration and filing fees have to paid by the applicant or InvIT by a demand draft in favour of 'Securities and Exchange Board of India' payable at Mumbai or respective regional or local office.

Application Fee

The applicant needs to pay non-refundable application fees of Rs.1 lakh along with the application to obtain a certificate of registration.

Registration Fee

The applicant has to pay a non-refundable registration fees a sum of Rs.10 lakh within fifteen days from the date of receipt of intimation from the SEBI Board.

Filing Fee

The publicly offered Infrastructure Investment Trust (InvIT) needs to pay the non-refundable filing fee as given below:
  • 0.1% in the case of initial and follow-on offer
  • 0.05% in case of the rights issue
Note:
  • If the issue size estimated by the InvIT differs from eventual issue size the fees paid by the InvIT is found to be deficient, the balance fee will be paid by the issuer with the recognized stock exchanges
  • If any excess fee is found to have been paid, it will be refunded by the Board to the InvIT.
The privately placed Infrastructure Investment Trust (InvIT) need to pay non-refundable filing fees of 0.1% of the total issue size including greenshoe option at the time of filing of draft placement memorandum with the Board.

Documents Required

The documents required for registering Infrastructure Investment Trusts are listed as follows:
  • Trust Deed
  • Identity and Address proof of the trustee
  • Identity proof and address proof of the Sponsor
  • Financial statements for the previous financial year
  • Net-worth certificate of the sponsor by a Chartered Accountant, not more than six months old from the date of application
  • Investment Management agreement
  • Identity proof and address proof of the Investment Manager, its directors or partners
  • Brief details of the assets proposed to be held under InvIT

Application Procedure for Registration of Infrastructure Investment Trusts

According to the SEBI Regulation, 2014, the person has to obtain a certificate of registration from the Board to acts as InvIT. The procedure to register infrastructure Investment Trusts is explained in detail below:
  • To register a trust as InvIT, an application form in prescribed format has to be submitted by sponsor on behalf of the trust. The application form is enclosed here:
  • The applicant has clearly described at the time of registration, details about proposed activities of the InvIT.
  • The Board on being satisfied that the applicant fulfils, the requirements will send intimation to the applicant and grant the certificate of registration.
Note: The Board may require the applicant or its authorized representative to appear before the Board for personal representation.
RENU SURESH
RENU SURESH Expert
Updated on: December 17th, 2019

Popular Post

Download ePAN Card – Get ePan from NSDL & UTIITSL
80 Small Business Ideas

Starting a small business can be a transformative venture, offering the exciting opportunity...

Nadakacheri – Income Caste Certificate Download Online in Karnataka
TDS Rate Chart for Financial Year 2025-2026 (Assessment Year 2026-2027)

Tax deduction at source, shortly and popularly known as TDS, was introduced by the Income Tax...

Divorce Rules in India: Everything You Need to Know
How To Download GST Registration Certificate Online?

Goods & Services Tax Certificate is issued to people who are registered under GST...

PAN Card Cancellation Online
Find Complete Details of GST Registration Procedure

GST registration applies to all individuals and entities supplying goods or services in India. GST...

Check Your PF Claim Status Online Using PF Tracking ID
Gift Tax in India: Applicability, Exemptions and Rules

Gift tax in India is applied when the value of the received gift exceeds ₹50,000 in the...

Check Your PF Claim Status Online Using PF Tracking ID
Old Regime vs New Regime 2025: Which Tax Regime is Better for You?

The Union Budget 2025 has brought significant changes to India’s personal income tax structure, raising the...

Check Your PF Claim Status Online Using PF Tracking ID
What is the minimum turnover for GST?

The Goods and Services Tax (GST) is an indirect tax system introduced in India in 2017. It functions...

Check Your PF Claim Status Online Using PF Tracking ID
How can I check if a trademark is registered?

A trademark search is simply checking if another person or organization does not already own the...

Check Your PF Claim Status Online Using PF Tracking ID
Section 194H of the Income Tax Act: TDS on Commission & Brokerage

Section 194H of the Income Tax Act in India mandates the deduction of Tax at Source (TDS) on commission or brokerage...

Check Your PF Claim Status Online Using PF Tracking ID
Section 80G Deduction - Income Tax Act

Section 80G Deduction is a facility available in the Income Tax Act which allows taxpayers to...

Check Your PF Claim Status Online Using PF Tracking ID
Crypto Tax in India: Taxation On Cryptocurrency

The Income Tax Department (ITD) has not provided specific guidance on crypto taxes for Indian investors. However...

Check Your PF Claim Status Online Using PF Tracking ID
Internal Audit Applicability Under Companies Act, 2013

Internal audit applicability is a critical concept for companies in India, impacting various...

Check Your PF Claim Status Online Using PF Tracking ID
Difference between Private and Public Company

In the business world, two main types of companies exist: private company and public company...

Check Your PF Claim Status Online Using PF Tracking ID
New GST Rules for Rent

Ministry of Finance vide a Notification No 05/2022- Central Tax (Rate) dated 13.7.2022 has issued...

Check Your PF Claim Status Online Using PF Tracking ID
GSTR-1 and GSTR-3B Due Date Extension - New Due Dates For January 2025

The Central Board of Indirect Taxes and Customs (CBIC) has recently announced an extension...

Check Your PF Claim Status Online Using PF Tracking ID
Different Depreciation Rates under Companies & Income Tax Act

Depreciation is a key concept in finance and accounting. It helps us manage how the value of...

Check Your PF Claim Status Online Using PF Tracking ID
Form 10IA - Section 80DD Deduction

Form 10IA of the Income Tax Department must be filed by taxpayers claiming income tax deduction...

Check Your PF Claim Status Online Using PF Tracking ID
GST on Used Cars: New 18% Tax Rate Explained

The Goods and Services Tax (GST) system in India has been a significant reform in the country's...

Check Your PF Claim Status Online Using PF Tracking ID
MSME Registration - Udyam Registration

India's Gross Domestic Product (GDP) benefits significantly from the substantial...

Check Your PF Claim Status Online Using PF Tracking ID
Section 43B(h) - New MSME 45 Days Payment Rule

The Finance Act, 2023 introduced the MSME 45-day payment rule under Section 43B(h) of the Income Tax Act...

Check Your PF Claim Status Online Using PF Tracking ID
Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced by Union Finance Minister...