Tax filing season is here.

And if there's one thing we've learned answering questions on this subreddit every day, it's this:

Most people don't make mistakes because taxes are complicated.

They make mistakes because they assume one rule applies to everything.

Here are 5 tax myths that keep showing up.

(1) "My income is below ₹12 lakh. So I don't have to pay tax."

Not always.

The ₹12 lakh rebate only applies to income taxed using slabs like:

• Salary
• Pension
• Bank interest

It doesn't apply to income taxed separately, such as:

• Short-term capital gains (STCG)
• Long-term capital gains (LTCG)

Example:

• Salary: ₹11.4 lakh
• Profit from selling shares within a year (STCG): ₹60,000
• Total income: ₹12 lakh

Many people expect ₹0 tax.

Reality:

• Salary → rebate applies → ₹0 tax
• STCG → taxed separately at 20%

You still pay tax on the ₹60,000.

(2) "I only made ₹500 profit from stocks. Surely I can still use ITR-1?"

No.

The amount doesn't matter.

Even ₹1 of Short-Term Capital Gain means you move from ITR-1 to ITR-2.

On the other hand...

If you only sold stocks or equity mutual funds after one year and your LTCG is below ₹1.25 lakh (with no losses to carry forward), you can now use ITR-1.

That's a new change this filing season.

(3) "I own US stocks, but they're worth almost nothing."

Still matters. If you hold:

• Foreign shares
• RSUs
• A foreign bank account

ITR-1 is no longer available. The value doesn't matter.

The fact that you own them does.

(4) "Old vs New tax regime changes everything."

Not really. Changing your tax regime mostly changes how salary-type income gets taxed.

Capital gains don't suddenly become tax-free because you picked a different regime.

Whether you're in Old or New:

• STCG keeps its own tax rate.
• LTCG keeps its own tax rate.

Changing regimes doesn't change that.

(5) "Which ITR form should I actually file?"

Here's the simplified version.

If you have...	Usually file...
Salary + interest	ITR-1
Salary + LTCG (listed shares/equity MF) up to ₹1.25L	ITR-1
Any STCG	ITR-2
Foreign shares / RSUs	ITR-2
Business income (presumptive)	ITR-4
F&O / Intraday / Business / Professional income	ITR-3

(Assuming no special situations like audit requirements.)

The One Thing To Remember

Think of your income as sitting in different buckets.

• Salary, pension and bank interest follow one set of rules.
• Capital gains follow another.
• Business income follows another.

Once you stop mixing those buckets together, most tax confusion disappears.

Quick Reality Check

Before filing, ask yourself these four questions:

• Did I sell any shares or mutual funds this year?
• Do I own any foreign shares or RSUs?
• Did I trade F&O or intraday?
• Am I choosing my ITR form because "that's what I filed last year"?

If any answer is yes, it's worth double-checking before submitting your return.

💬 Let's test this.

Comment your income mix like this:

Salary ₹9L + FD interest ₹30k + Equity MF LTCG ₹70k

or

Salary ₹14L + STCG ₹18k

we'll tell you which ITR form usually applies.

Still confused with Tax Regimes?

Check out - Old vs New Tax Regime: Which Is Better For You?

Disclaimer: This is educational content and not a tax or financial advice.

You're comparing two job offers.

• One pays ₹30 lakh.
• The other pays ₹24 lakh.

Do you immediately pick the ₹30 lakh one? Probably not.

You'll probably ask things like:

• Is the company stable?
• Is there room to grow?
• How stressful is the job?
• Who's my manager?
• How many hours will I work?

Because salary is only one part of the picture.

Many people don't think the same way when investing.

They compare REITs and InvITs, look at the highest yield, and stop there.

Let's see what are things that one should really while picking REIT or InvIT:

🏢 If You're Looking at a REIT...

1. Occupancy

Don't just read the overall occupancy number.

Ask:

"Which buildings are actually empty?"

For example, Embassy REIT reports around 94% occupancy by value, but occupancy differs across cities.

One struggling property can matter much more than the portfolio average.

2. Tenant Lock-in (WALE)

WALE = Weighted Average Lease Expiry.

Think of it as: "How long is the rent contract locked in?"

Embassy's WALE is around 8.4 years.

A longer WALE generally means more predictable rental income.

3. Tenant Concentration

If one tenant leaves...

...how much does it hurt?

Healthy diversification matters.

Embassy's top five tenants contribute about ~25% of rentals.

JP Morgan contributes roughly ~7%.

4. Growth Pipeline

A REIT shouldn't only collect rent. It should also have opportunities to grow.

Ask:

• Are new buildings coming?
• Are acquisitions happening?
• Is occupancy improving?

Growth today often becomes tomorrow's distributions.

5. Debt

Debt isn't automatically bad. But more debt means higher refinancing risk.

Embassy currently operates around 32% Net Debt to Gross Asset Value, which is generally considered moderate.

⚡ If You're Looking at an InvIT...

1. What Asset Does It Actually Own?

• A transmission line.
• A toll road.
• A gas pipeline.
• A renewable energy project.

They're all InvITs...

...but they behave very differently.

2. How Long Will That Asset Keep Generating Cash?

Many infrastructure assets don't last forever.

For example:

• A toll road concession may last 20–30 years.
• Many power transmission projects earn regulated income for around 35 years.

Knowing the remaining contract life tells you how long today's cash flows can continue.

3. How Much of the Yield Is Actually Income?

This is the lesson from our previous post. Headline yield isn't the whole story.

For FY26:

• IndiGrid: around 68% of distributions came from interest, dividend and other income.
• The remaining 32% was capital repayment.

Understanding this breakup helps explain what you're actually receiving.

4. Debt

Infrastructure projects often use more debt than office buildings.

For example: IndiGrid operates around 58% Net Debt to AUM.

Higher leverage can improve returns. It also increases risk.

5. Does Management Deliver What It Promises?

Look at history.

Has the trust consistently met its own distribution guidance?

IndiGrid delivered its FY26 guidance of ₹16 per unit.

That's the sort of thing worth checking before investing.

Here's What That Looks Like

	Embassy REIT	IndiGrid InvIT
Primary asset	Office buildings	Power transmission assets
Asset life	Potentially indefinite	Long-term regulated contracts
Headline Yield	~5.9%	~8.9%
Real income share	~25 - 30%	~68%
Debt	~32% Net Debt/GAV	~58% Net Debt/AUM

The Biggest Mistake

Many investors compare only this: Yield

Experienced investors compare questions like:

• Where is the income coming from?
• Can it grow?
• How much debt is involved?
• How long will the cash flows last?
• Is management delivering?

Yield becomes just one line in a much bigger picture.

The One Line To Remember

A high yield tells you how much cash you might receive.

A good checklist tells you how sustainable that cash really is.

The second question is usually the more important one.

💬 If you had to pick just one number before buying a REIT or InvIT (other than yield), what would it be?

📚 REIT & InvIT Series

• Part 1: What REITs and InvITs Actually Are! 🏢🏭
• Part 2: How REITs & InvITs Actually Pay You? How do they get Taxed?
• Part 3: Why Do InvITs Pay 9–13% While REITs Usually Pay Just 4–6%
• Part 4: Why Two Investments Showing the Same 13% Yield Can Generate Completely Different Income

Thanks for following the series! Hope it made REITs and InvITs feel a little less intimidating.

Imagine two investments.

Both advertise a distribution yield of around ~13%.

Would you assume they're generating roughly the same amount of income?

Most people would. Turns out... that's not necessarily true for InVITs.

Here's why.

Not Every Rupee You Receive Is New Income

When investments like REITs and InvITs pay quarterly distributions, the money doesn't always come from the same source.

A distribution can include:

• Interest → Income generated by the underlying assets.
• Dividend → Profits distributed by the underlying companies.
• Capital repayment → Part of your own invested money being returned to you.

Your bank account may not tell the difference. But as an investor, it's an important one.

Think About It Like This

Imagine you buy a flat and rent it out.

Every month, ₹50,000 lands in your account.

Now imagine the breakup actually looks like this:

• ₹30,000 = Rent from your tenant.
• ₹20,000 = The builder gradually returning part of the deposit you had originally paid.

You still receive ₹50,000. But only ₹30,000 is fresh income.

The remaining ₹20,000 is simply your own money coming back.

That's broadly how capital repayment works in many REIT and InvIT distributions.

Here's a Real Example

Both of these InvITs distributed almost the same headline yield.

InvIT	Headline Yield	Interest + Dividend + Other	Capital Repayment	Real Income Yield
Capital Infra Trust	~13.1%	67.9%	32.1%	~8.9%
Indus Infra Trust	~12.5%	28.9%	71.1%	~3.6%

(Source: Official Q4 FY26 distribution disclosures.)

Now look at the last column.

Both has a distribution yield close to ~13%.

But one generated more than twice as much actual income during the quarter.

Why Does This Happen?

Not because one investment is "good" and the other is "bad."

A lot depends on how the trust originally financed the assets it owns.

When many REITs and InvITs buy assets, they often do it through project companies (called SPVs) and partly finance them using loans.

Over time, as those loans are repaid, part of the cash distributed to investors is classified as capital repayment instead of interest or dividends.

So two investments can:

• own similar assets,
• have similar risk,
• show almost identical headline yields...

...and still have very different distribution breakups.

Is Capital Repayment a Bad Thing?

Not at all.

In fact, many investors actually like it because:

• It usually isn't taxed immediately.
• Instead, it reduces your purchase cost.
• Tax is generally deferred until you eventually sell your units.

So capital repayment isn't "fake."

But it also isn't the same as recurring income.

Understanding that difference helps you compare investments much more accurately.

Why This Matters

Imagine two investors.

Each receives ₹1 lakh in distributions this year.

One invested in Capital Infra Trust.

The other invested in Indus Infra Trust.

Both proudly say, "My investment yielded around 13%."

Technically...

They're both right.

But one investor actually received more than twice as much operating income as the other.

The second investor received a much larger share of their own capital back instead.

The One Line To Remember

A headline yield tells you how much cash you'll receive. It doesn't tell you how much of that cash is actually new income.

Before chasing a double-digit yield, spend two minutes looking at the distribution breakup.

Sometimes the most important number isn't the yield.

It's what's inside the yield.

💬 Before today, had you ever looked at the breakup of a REIT or InvIT distribution? Or did you assume that two investments showing the same yield were generating roughly the same income?

📚 REITs & InVITs Series So far

• What REITs and InvITs Actually Are! 🏢🏭
• How REITs & InvITs Actually Pay You? How do they get Taxed?
• Why Do InvITs Pay 9–13% While REITs Usually Pay Just 4–6%?

If REITs and InvITs both generate regular cash flows...

Why do REITs usually distribute around 4–6%, while many InvITs distribute 9–13%?

Is it simply because InvITs are riskier?

Partly Yes. But there's a much bigger reason.

They Own Very Different Businesses

A REIT usually owns assets like:

• Office parks
• Shopping malls
• Commercial buildings

These buildings can keep earning rent for decades.

• Tenants may change.
• Rents may go up or down.
• The building can be renovated or leased again.

In other words, the asset can continue generating income for a very long time.

Now think about many InvITs. They own infrastructure like:

• Toll roads
• Power transmission lines
• Gas pipelines

Here's the important difference.

An InvIT often doesn't own the asset forever.

Instead, it owns the right to earn income from that asset for a fixed period under a concession or long-term agreement.

A simple example

Imagine the government asks you to build a highway.

In return, it says: "You can collect tolls from this road for the next 20 years."

For those 20 years, the toll income is yours. After that?

The right ends, and the road goes back to the government.

So unlike an office building that can keep earning rent indefinitely, some infrastructure projects come with an expiry date on the cash flows.

Not every InvIT works exactly this way, but many infrastructure assets operate under long-term concessions or regulated agreements rather than perpetual ownership.

Investors Buy Them for Different Reasons

People invest in REITs expecting:

• Regular rental income
• Growth in rents over time
• Long-term appreciation in property values.

Now compare that with many InvITs.

Most investors buy them primarily for one reason:

• Regular cash distributions.
• Growth is usually slower.

So a larger share of the expected return comes through cash paid today rather than future appreciation.

Risk Is Still Part of the Story

InvITs can also face risks that REITs generally don't.

Things like:

• Tariff revisions
• Regulatory changes
• Traffic falling below expectations
• Counterparty payment delays
• Government policy changes

Since investors take on these additional risks, they usually expect a higher cash yield in return.

So yes...

Higher risk is one reason.

But it's not the only reason.

Here's What That Looks Like Today

REIT	Distribution Yield
Embassy Office Parks REIT	~5.9%
Brookfield India REIT	~6.3%
Nexus Select REIT	~5.9%
Mindspace REIT	~4.2%

InvIT	Distribution Yield
IndiGrid InvIT	~8.9%
IRB InvIT Fund	~10.8%
PowerGrid Infrastructure InvIT	~12.7–13.0%
Capital Infra Trust	~13.1%

Source: Investor presentations/distribution announcements and NSE closing prices (July 2026).

Noticed the pattern now?

Most REITs cluster around 4–6%.

Many InvITs distribute almost twice as much.

The One Line To Remember

REITs are generally bought for a mix of income and long-term growth.

InvITs are generally bought for higher current income, with lower expected growth and additional infrastructure-related risks.

That's why their yields are usually much higher.

Coming Up in Part 4...

But here's where it gets even more interesting.

Imagine two InvITs.

Both have a distribution yield of around 13%.

You'd naturally assume they're generating roughly the same income.

Not Really!

That's what we'll unpack in Part 4.

💬 If you had ₹1 lakh to invest today, would you prefer a REIT paying around 6% with greater long-term growth potential, or an InvIT paying around 12% but with different risks? What would influence your decision?

📚 REITs & InVITs Series So far

• What REITs and InvITs Actually Are! 🏢🏭
• How REITs & InvITs Actually Pay You? How do they get Taxed?

Quick question.

If your REIT or InVIT pays you ₹10,000 tomorrow as dividend and next year you sell those units for a profit...

Do both get taxed the same way?

No and that's where many investors get confused.

Don't know what these REITs & InVITs actually are? Check out the last post!

Your So Called Dividend Isn't One Type of Income

When a REIT or InvIT sends you money every quarter, it isn't a single payment.

It's usually a combination of multiple components, each with its own tax treatment.

Component	How It's Taxed
Interest	Taxed at your income tax slab (10% TDS)
Dividend	Usually exempt*
Capital Repayment	Not taxed immediately. Instead, it reduces your purchase cost, which can increase your capital gains when you eventually sell.
Rental Income (REITs only)	Taxed at your income tax slab (10% TDS)

*Exempt unless that underlying entity (SPV) opted into the 22% concessional corporate tax rate. This is rare among India's current REITs/InvITs, but check your trust's FAQ to be sure.

In other words...

Your quarterly distribution isn't one stream of income.

It's a mix of different income types, each following a different tax rule.

Selling Your REIT Is a Completely Different Story

Now let's talk about selling your units.

This follows capital gains tax rules (like your equity stock), not the distribution rules as above.

If you sell listed REIT or InvIT units:

After holding them for more than 12 months

• The profit becomes Long-Term Capital Gain (LTCG).
• Gains above ₹1.25 lakh in a financial year are taxed at 12.5%.

Within 12 months

• The profit becomes Short-Term Capital Gain (STCG).
• Taxed at 20%.
• No ₹1.25 lakh exemption.

This is where the famous ₹1.25 lakh LTCG exemption actually applies and not to your quarterly payouts.

One More Detail People Miss

That ₹1.25 lakh exemption isn't a separate benefit for REITs.

It's a shared annual limit across:

• Listed equity shares
• Equity mutual funds
• REITs
• InvITs

So if you've already used part of that exemption by selling stocks or equity mutual funds, there's less available for your REIT or InvIT gains.

Imagine Two Investors

Investor A

Receives ₹1 lakh in REIT distributions during the year.

Investor B

Sells REIT units and earns a ₹1 lakh long-term capital gain.

Many people assume both enjoy the same tax treatment. They don't.

Investor A's tax depends on whether the payout was interest, dividend, rental income or capital repayment.

Investor B falls under the capital gains rules.

The One Line To Remember

Quarterly REIT distributions and profits from selling REIT units are taxed under different rules.

The ₹1.25 lakh LTCG exemption applies only when you sell your units not when you receive quarterly distributions.

Knowing that one distinction can save a lot of confusion during ITR season.

Coming Up in Part 3...

Have you noticed one interestring pattern?

REITs in India usually distribute around 4–6%.

Many InvITs distribute 9–13%.

That's almost double.

Why?

We'll break it down in Part 3.

💬 Before today, did you know your REIT payout could contain four different types of income? And if you already invest in REITs or InvITs, have you ever checked the breakup of your latest distribution?

₹9.25 lakh crore

That's how much money now sits in REITs and InvITs in India (as of June 2026). Seven years ago, this market barely existed.

Chances are you've never held either or you have, through a mutual fund, and had no idea.

So what actually are these things? 👇

REITs (Real Estate Investment Trusts)

• You buy units. The trust buys the buildings.
• Owns income-generating real estate = office parks, business parks, shopping malls.
• The income primarily comes from rent.
• You're basically a landlord who never has to fix a leaky tap.

InvITs (Infrastructure Investment Trusts)

• An InvIT follows the same structure, but owns infrastructure assets instead.
• Think power transmission lines, toll roads, renewable energy assets, or telecom towers.
• The income comes from tariffs, toll collections, or long-term usage contracts.
• You're basically a toll booth operator who never has to stand in the sun.

Why do these even exist?

Because owning commercial real estate or infrastructure traditionally required crores of rupees.

REITs and InvITs break those assets into small, listed units that anyone can invest in. You can own a slice of an office park for the price of a nice dinner.

By regulation, both REITs and InvITs distribute at least 90% of their net distributable cash flows to investors.

That makes them popular with investors looking for regular income.

The Biggest Difference?

The biggest difference isn't the structure. It's where the cash comes from.

• A REIT's income depends on how full its buildings are (Occupancy Rate).
• An InvIT's income depends on how much traffic crosses its roads or power flows through its lines (Utilization Rate).
• One's a landlord. One's a toll collector. Neither one fixes potholes.

	REIT	InvIT
Owns	Office buildings	Power lines, roads, towers
Earns from	Rent, occupancy	Tariffs, tolls, usage fees
Grows via	New leasing, acquisitions	Winning new project bids
Main risk	Vacancy, rent cycles	Regulatory resets, contracts

Examples

🏢 Embassy REIT (India's first, biggest office REIT in Asia by area)

• 14 office parks, 51.1 million sq ft, across Bengaluru, Mumbai, Pune, NCR, Chennai
• ~91% occupancy but not evenly: Mumbai's at 100%, Bengaluru at 92%
• Distribution yield ~5.7–6%
• Occupancy gap is the risk. A REIT's income can swing park by park, city by city.

🛣️ IndiGrid (India's first power-sector InvIT)

• 45 projects: transmission lines, substations, solar, and battery storage
• Distribution yield ~9–11% - noticeably higher than Embassy's
• That extra yield isn't free (We'll unpack a real example of this going wrong in Post 3.)

Quick scoreboard, mid-2026:

• 4 listed REITs:
  • Embassy
  • Mindspace
  • Brookfield India Real Estate Trust
  • Nexus Select Trust
• 5 listed InvITs:
  • IndiGrid
  • PowerGrid InvIT
  • IRB InvIT
  • Indus Infra Trust
  • Capital Infra Trust

The easiest way to remember it?

Rent = REIT.

Roads, power lines and tariffs = InvIT.

Once you understand where the cash comes from, the rest starts to make sense.

💬 Which "engine" would you rather own - office buildings at ~6% yield, or toll roads and power lines at ~10%? And why?

Part 1 of our REITs & InvITs series, next up: how the income gets taxed, component by component.

You finally get the email - "Congratulations! You've been promoted." 🎉

• Better title.
• Better salary.
• Maybe even that long-awaited Europe or Thailand trip starts looking possible.
• Your EPF contributions increases too

And if it gets high enough, part of the interest on that contribution can become taxable.

Most people don't even realise it happened.

Wait... Isn't EPF Completely Tax-Free?

That's one of the biggest myths around EPF.

If your own EPF contribution exceeds ₹2.5 lakh in a financial year, the interest earned on the excess contribution becomes taxable under Income from Other Sources.

For many young professionals, that's nowhere close today.

But after a few promotions?

It can happen surprisingly quietly.

How People End Up Crossing The Limit

Imagine this.

• You join your first job.
• Your EPF deduction is small.
• You barely notice it on your payslip.

Fast forward a few years.

• A couple of promotions.
• A few good appraisals.
• Your salary has grown nicely.

Your company calculates EPF on your entire basic salary > your EPF contribution grows automatically too.

One day, you cross the ₹2.5 lakh contribution limit without even realising it.

EPFO also deduct 10% TDS on interest earned on corpus above 2.5 lakh.

What Changed Now?

Under the new EPF Scheme, 2026, the mandatory EPF contribution is now capped at 12% of the ₹15,000 wage ceiling.

That works out to:

• ₹1,800 per month
• ₹21,600 per year

In other words, your mandatory EPF contribution no longer keeps increasing automatically every time your salary goes up.

Anything beyond this is a conscious choice, not the default.

That gives employees more control over how much they want to lock away for retirement.

The Bigger Lesson

A salary hike doesn't just change only your take-home pay.

• It changes taxes.
• PF.
• Gratuity.
• Bonus calculations.
• And sometimes, your long-term financial planning.

That's why it's worth spending five minutes reading your payslip after every appraisal and not just your salary revision letter.

💬 Before today, did you know your EPF contribution could quietly increase with every promotion? And have you ever checked how much of your salary actually goes into EPF?

Let's hope you never have to find out.

But if you did lose your job tomorrow...

How quickly could you withdraw your entire EPF balance?

Until recently, many people believed the answer was about 2 months.

That's no longer true.

As part of a major overhaul of its withdrawal rules, EPFO has made your PF harder to access after unemployment.

Here's What Changed

	Earlier	New Rule (June 2026)
First withdrawal after job loss	After 1 month, 75–100% of your own contribution + interest.	After 1 month, 75–100% of your own contribution + interest.
Remaining balance	After 2 months	After 12 months
Early withdrawal from EPS (Pension)	After 2 months	After 36 months

In simple terms:

If you lose your job today, you can still withdraw 75% of your EPF after one month.

But the remaining 25% stays locked unless you've been unemployed for 12 months (or qualify under specific exceptions such as retirement, permanent disability, retrenchment/VRS or death).

Translation: 1 out of every ₹4 in your PF can no longer be touched at all, except above circumstance.

Why Did EPFO Make It Harder?

Because too many people were using their retirement savings for short-term expenses.

According to EPFO's own data:

• Around 50% of members retired with less than ₹20,000 in their EPF account.
• Around 75% retired with less than ₹50,000.

The problem wasn't poor returns.

EPF currently earns 8.25% annually.

The problem was that many people kept withdrawing their retirement savings long before retirement.

You could say EPFO decided to take away the car keys before people emptied their retirement fund.

What Changed Even If Your Job Is Fine?

EPFO also simplified the rules for partial withdrawals while you're still employed.

• Simpler framework
  • Earlier, there were 13 separate withdrawal categories, each with different eligibility conditions.
  • Now just 3:
    • Essential Needs
    • Housing Needs
    • Special Circumstances
• Easier eligibility
  • Some withdrawal categories earlier required up to 7 years of service
  • Now, 12 months for all
• Faster claim processing
  • EPFO has also tightened its own accountability.
  • Pension claims must now be processed within 20 days.
  • Also, 12% annual interest for the delayed period.

What This Means For You

Imagine two people.

Person A thinks: "If I lose my job, I can always empty my PF in a couple of months."

Person B knows: "I'll get 75% after one month, but the remaining 25% may not be available for up to a year."

Only one of them has planned their emergency fund correctly.

The Bigger Lesson

Your EPF was never meant to replace your emergency fund.

These new rules make that even clearer.

If losing your job would force you to depend on your PF immediately, it might be worth asking:

Is your emergency fund actually large enough?

Because retirement savings and emergency savings serve two very different purposes.

The One Line To Remember

Your PF just became harder to withdraw after losing a job.

That's good for your retirement.

But it's a reminder that your emergency fund shouldn't depend on your PF in the first place.

💬 Before today, did you think you could withdraw your entire PF within two months of losing your job? And if not, would your current emergency fund comfortably cover a long job search?

Related Post:

• EPF vs PPF vs NPS: Where Should You Actually Park Your Long-Term Money? 🤔
• How to Structure Your Emergency Fund - Many Indians Are Structuring Their Safety Net WRONG 🔥

How do you guys dispose of thermocole packaging from AC/TV deliveries? Kabadiwala doesn’t take it, BMC won’t collect it.

What do you actually do?