Realty industry seeks clarity on REITs, FDI in budget

The realty industry has high expectations from Finance Minister Arun Jaitley's Budget to be announced tomorrow, as it wants clarity on Real Estate Investment Trusts (REITs) and foreign direct investment in the sector.
The sector is hoping for removal of dividend distribution tax on distribution of profits by special purpose vehicle to REITS, removal of tax deducted at source on distribution of income by business trust non-residents and exemption from stamp duty on transfer of asset to REITs.
"The new government has the opportunity of making Indian real estate more investment-friendly and attractive by introducing a revised tax code. Until vital changes to overcome the tax hurdles are taken, REITs, which can be a life-saver for the sector, cannot take off," property consultant Jones Lang LaSalle India Chairman and Country Head Anuj Puri said.

"Last year, the real estate sector got much-needed attention in the budget and got important announcement such as pass-through of taxes for REITs, changes in FDI policy and tax incentives for end consumers ... The sector expects few more initiatives," Colliers International Associate Director Research Surabhi Arora said.
RBS Financial Services (India) Head of Real Estate Services Anand Moorthy said, "The clarity on REITS is crucial as it is expected to have a far-reaching implication in foreign investment flows, bank funds and could also provide opportunities for domestic investors to invest in debt returns from income-yielding assets."
Besides clarity on REITs and FDI, the sector is expecting some decisive action on giving it an "infrastructure" status, single window clearance, extension of tax incentives for home loan buyers, among others.

"If housing is given infrastructure status, funding could be made easier with easy role over. Besides, home loan rates should be brought below 7.5 per cent, while lending rates need to be below 10 per cent," Kumar Urban Development Chairman and MD Lalit Kumar Jain said.
Tata Housing Managing Director and CEO Brotin Banerjee said that government's ambitious targets for developing smart cities and affordable housing "projects are closely linked to infrastructure development and need to keep pace with rapid urbanisation".