SEBI released a consultation paper on June 1, 2026, reviewing the framework for calculating Net Distributable Cash Flows (NDCF) for Infrastructure Investment Trusts (InvITs). The paper seeks public comments on proposed amendments to existing regulations governing how InvITs distribute cash flows to unitholders. Current NDCF calculations determine the minimum 90% distribution requirement for InvITs to maintain their tax-pass-through status. The review addresses operational challenges faced by InvITs in computing distributable surplus and aims to streamline the calculation methodology for better transparency and investor protection.

Net Distributable Cash Flows represent the actual cash available for distribution to InvIT unitholders after meeting operational expenses, debt obligations, and regulatory reserves. Under SEBI InvIT Regulations 2014, InvITs must distribute at least 90% of their NDCF to maintain tax benefits. The current framework has created ambiguities around treatment of capital expenditure, working capital adjustments, and contingency reserves, leading to inconsistent interpretations across different InvITs. This consultation paper likely proposes standardized methodologies for calculating NDCF, potentially addressing issues like classification of maintenance vs development capex, treatment of committed but unutilized credit facilities, and timing of distribution obligations. For India's infrastructure financing ecosystem, clearer NDCF rules enhance investor confidence by ensuring predictable income streams. InvITs have emerged as crucial vehicles for infrastructure monetization, with assets worth over ₹4 lakh crores. Standardized NDCF calculations improve comparability across InvITs, helping institutional investors make informed decisions. The review also aims to align Indian practices with global REITs/InvITs standards while addressing unique aspects of Indian infrastructure assets like toll roads, power transmission lines, and fiber networks.