Industry demands the tax norms to be relaxed for REITs to attract foreign investors
Real estate developers have been requesting the government to give them a go ahead with REIT (Real Estate Investment Trusts). Blackstone, K Raheja, Embassy, Panchsil, DLF and RMZ could be the first off the block together listing as much as 75 million square feet, for an estimated $5 billion, in the next twelve months, once the REITs get clearance a in India.
Over the next couple of years real estate developers are looking to attract $10 billion of investments as they bundle over 100 million square feet of commercial property in to REITs. The properties are located across eight Indian cities. Anuj Puri the chairman and country head, Jones Lang LaSalle India (JLL) mentioned that the foreign investors prefer REITs as they offer a wider range of properties for them to buy.
As per the Indian Government laws the foreign investors can buy only into IT Parks or special economic zones, but not stand-alone buildings or malls. However REITs will give them an opportunity to bundle a variety of properties which will make them attractive investment options.
The tax structure is unclear and REITs would be taxed at three levels which might make the process complicated. The directive is not clear whether dividends received from REITs would attract the same treatment as dividends paid by companies, which are not taxed when the receiver receives it.
The industry feels that the tax impact should be negligible else returns to the investor could be very less and make it an unattractive investment for the investor. The norms aren’t clear on how the capital gains would be treated and whether it would be similar to those from equities and mutual funds.
Source- The Financial Express
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