ITR filing 2026: Invested in REITs or InvITs? Here's how to report the income correctly while filing your tax returns

With the deadline to file Income Tax Returns (ITRs) for Assessment Year (AY) 2026-27 approaching, taxpayers who have invested in Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) should pay close attention to how they report this income. Unlike bank interest or salary, income received from REITs and InvITs is not taxed uniformly, making correct reporting essential to avoid errors, notices or delays in processing refunds.

The tax treatment depends on the nature of the distribution received. Since a single payout from a REIT or InvIT can comprise multiple components — including interest, dividend, rental income or capital repayment—each must be reported separately in the appropriate schedule of the ITR.

Check the distribution statement first

Before filing the return, investors should carefully review the quarterly or annual distribution statement issued by the REIT or InvIT. They should also reconcile the details with the Annual Information Statement (AIS) and Form 26AS to ensure the reported income matches the tax records available with the Income Tax Department.

This step is important because different components of a REIT or InvIT distribution are taxed differently, and incorrect classification could result in mismatches.

How different components are taxed

If the distribution includes interest income, it is generally taxable in the hands of the investor and should be reported under the head "Income from Other Sources."

Dividend income should also be disclosed in the return under the applicable income head, depending on the taxpayer's facts and the relevant tax provisions.

If the distribution includes capital repayment, it is generally not taxable as income in the year of receipt. However, taxpayers should retain the distribution statement as documentary evidence for future reference.

Reporting capital gains on sale of units

If an investor sold REIT or InvIT units during the financial year, any profit or loss arising from the transaction must be reported separately under the Capital Gains schedule in the ITR.

The applicable tax treatment will depend on factors such as the holding period and the prevailing tax rules for the relevant assessment year. Investors should not combine sale proceeds with periodic distributions, as these represent two different sources of income and must be disclosed separately.

Which ITR form should you use?

In most cases, salaried individuals who have earned income from REITs or InvITs can file ITR-2. However, taxpayers who also have business or professional income may need to file ITR-3 or ITR-4, depending on their overall income profile and eligibility. The choice of ITR form should be based on all sources of income and not solely on income received from REITs or InvITs.

Keep supporting documents handy

Before filing the return, investors should keep their quarterly or annual REIT or InvIT distribution statements, broker or demat account statements, AIS, Form 26AS and contract notes for any sale of units. Reconciling these records with the information reported in the ITR can help avoid mismatches, tax notices and delays in processing refunds.

Taxpayers should report each component of REIT or InvIT income under the appropriate head of income instead of treating the entire distribution as a single receipt. Verifying the figures against the distribution statement, AIS and Form 26AS before submitting the return can help ensure accurate reporting and a smoother ITR filing process.