REIT’s Debt Access Framework Amendment to Boost Realty

Debt financing of emerging investment vehicles – REITs and InvITs – will be enabled by making a suitable amendment in order to attract more investment in the real estate as well as infrastructure sectors. REITs (real estate investment trusts) and InvITs (infrastructur

BY Realty Plus
Published - Thursday, 04 Feb, 2021

REIT’s Debt Access Framework Amendment to Boost Realty

Debt financing of emerging investment vehicles – REITs and InvITs – will be enabled by making a suitable amendment in order to attract more investment in the real estate as well as infrastructure sectors. REITs (real estate investment trusts) and InvITs (infrastructure investment trusts) are relatively new investment instruments in the Indian context but are extremely popular in global markets, as per the government.. While a REIT comprises a portfolio of commercial real assets, a major portion of which are already leased out, InvIT comprises a portfolio of infrastructure assets such as highways, power transmission assets. “Debt financing of InVITs and REITs by foreign portfolio investors (FPIs) will be enabled by making suitable amendments in the relevant legislations,” Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2021-22 in Parliament. This will further ease access of finance to InvITS and REITs thus augmenting funds for infrastructure and real estate sectors, she added. In order to provide ease of compliance, the finance minister proposed to make dividend payment to REIT and InvIT exempt from tax deducted at source (TDS). Further, as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax, the minister proposed to provide that advance tax liability on dividend income would arise only after the declaration/payment of dividend. Also, for FPIs, it has been proposed to enable deduction of tax on dividend income at lower treaty rate.