REITS and InvITs will allow domestic and NRI investors to invest in Infra Projects
There is some true good news for the real estate industry and infrastructure industry as the government today proposed tax incentives for two new investment instruments -REITs and InvITs- . This is expected to attract long term funds from foreign and domestic investors, including the NRIs.
The new investment products, Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), can be listed on stock exchanges like shares of any company. This is expected to pool in money for these sectors as retail and institutional investors can buy or sell those securities.
Arun Jaitley said while presenting Union Budget 2014-15 on July 10, mentioned that REITs have been successfully used as instruments for pooling of investment in several countries. The government is ready to provide necessary incentives for REITs which will have pass through for the purpose of taxation. A modified REIT-type structure for infrastructure projects was also announced as Infrastructure Investment Trusts (InvITs).
InvITs will have a similar tax efficient pass through status, for PPP (public-private partnership) and other infrastructure projects. This has brought a lot of smiles to the industry and the capital markets regulator SEBI (Securities and Exchange Board of India).
These measures were taken to increase investment and reduce the pressure on the banking system. These new products would allow investors to invest in specific products linked to real estate projects and infrastructure projects, while providing necessary safeguards which are not available in the case of shares.
These regulations were placed in public domain for comments and the final norms are yet to be notified. From SEBI’s end the regulator is ready with guidelines and it would be announced immediately after the tax clarity from the government.
Source- The Financial Express
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