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.

₹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.

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?