Realty body seeks greater tax clarity for REITs, InvITs

Real estate industry body APREA has sought greater clarity on taxation issues for the newly created investment vehicles REITs and InvITs.
The Asia Pacific Real Estate Association applauded capital markets regulator Sebi for issuing final regulations on Real Estate Investment Trusts and Infrastructure Investment Trusts but said that tax clarity for REITs and InvITs is a critical issue.
"A significant stumbling block remains the tax treatment of REITs and InvIT's," APREA CEO Peter Verwer said.
The new norms for listing of business trust structures, REITs and InvITs, were notified by the Securities and Exchange Board of India last month in order to attract more funds in a transparent manner into realty and infrastructure sectors.

Through these trusts investors put funds in products linked to real estate and infrastructure projects.
Verwer said: "Several companies are keen to utilise the benefits of a public real estate platform, including access to competitively priced capital, liquidity, rights issues and placements.

"By attracting more funds to India's infrastructure and real estate sectors, REITs and InvIT's can spur economic development, create more jobs and generate retirement nest eggs for India's citizens."
Under the new guidelines for both trusts, the minimum initial offer size should be Rs 250 crore with a public float of at least 25 per cent.
The minimum asset base for these trusts to get listed is Rs 500 crore.

To ensure transparency, these trusts would be subject to stringent norms on disclosure as well as related party transactions.