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UPSC 2023: Consider the following statements: Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable. Statement-II: InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’. Which one of the following is correct in respect of the above statements?
(a)Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b)Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c)Statement-I is correct but Statement-II is incorrect
(d)Statement-I is incorrect but Statement-II is correct
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Not attemptedCorrect Answer: (d) Statement-I is incorrect but Statement-II is correct
Income distributed by an InvIT passes through to unit-holders; interest is taxable in their hands under section 194LBA, so Statement-I is incorrect. InvITs can borrow from banks; if they default on a secured loan they fall within the definition of ‘borrower’ under the SARFAESI Act, 2002, making Statement-II correct. Therefore, Statement-I is incorrect while Statement-II is correct. ([testbook.com](https://testbook.com/question-answer/consider-the-following-statements-statement-i--647300b858a4c1d7d9ef416d?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2023 Indian Economy question?▼
The correct answer is option (d): Statement-I is incorrect but Statement-II is correct. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Financial Markets & Capital Markets question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2023, GS Paper 1, as Question 21. It falls under Indian Economy > Financial Markets & Capital Markets.
What is the difficulty level of this UPSC question?▼
This question is rated "difficult". It is a challenging question that demands deep subject knowledge and analytical thinking.
How many UPSC Prelims questions have been asked from Financial Markets & Capital Markets?▼
UPSC has asked 39 questions from Financial Markets & Capital Markets (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.