Budget 2014-15: Tax incentives proposed for REITs, InvITs
The Union Budget 2014-15 has given a noteworthy boost to the real estate and infrastructure sectors of the country. Among the key proposals of the government in the recently-presented Budget are tax incentives for two new investment products — Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
The proposed tax incentives for REITs and InvITs will chiefly serve as an additional attraction for drawing long-term funds from Indian as well as overseas investors.
Both the new investment instruments can be listed on stock exchanges – similar to the listing of shares of a company – and will unfold an opportunity for retail and institutional investors to purchase or sell those securities.
With the tax incentives proposed by the government for REITs marking the acceptance of a long-standing demand from the real estate industry and the capital markets regulator Sebi, Finance Minister Arun Jaitley drew special attention – during his Budget speech – to the successful use of REITs as ‘investment-pooling’ instruments by a number of countries.
Asserting his intention to “provide necessary incentives for REITs which will have pass-through for the purpose of taxation,” Jaitley said that the InvITs essentially underscore an innovative and modified REIT-type structure for infrastructure projects. Jaitley also added that the InvITs will have “a similar tax efficient pass-through status, for PPP (public-private partnership) and other infrastructure projects.”
Source- The Economic Times
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