Real estate Industry seeking Few Tax Incentives under REITS

Bangalore: To draw Non resident Indians, long term foreign and domestic investors in a translucent manner the Securities and Exchange Board of India had notified new real estate investment trust, for the purpose of taxation as REITS will attract more investors into realty sector. To make sure the success of new business trust structure property developers required more tax incentives in the upcoming budget on investment.

Last year, the SEBI had notified the regulations after Finance Minister Arun Jaitley, in the 2014-15 budget and bestowed Real Estate Investment Trusts (REITS) the Pass through status for the purpose of taxation to help the product category pick up.

“To overwhelm the tax hurdles the crucial changes are required, until the REITs can be exact life-savers for Indian real estate market” JLL India Chairman and Country Head Anuj Puri said in its pre budget wish list.

“Numerous players are keen on raising funds through REITs, but due to the taxation rules many are holding back their plans”, Dinesh Kanabar, CEO of Tax advisory firm Dhruva said. For REITS sponsors and investors, the capital market regulatory has suggested eradicating capital gains tax  and minimum alternate tax because many players are holding back to raise funds through this new investment route citing taut taxes.

REITS (real estate investment trusts) offer investment avenues for investors with less risk along with regular income than investing in under construction properties.

Realtors apex body CREDAI Chairman Lalit Kumar Jain says “by considering the overall economy and real estate sector, the Government must address this Taxation issue and should offer some tax incentives like stamp duty on properties under REITS”. The government is likely to provide few tax sops in the Budget, Industry trackers say.

To become more proficient for overseas investors, much to be carried out on tax structure as many leading developers and investors are avidly holding up to adopt this new route. To begin functioning in the country, the realty industry is expecting few tax clarifications on REITS, said Global property consultant CBRE South Asia CMD Anshuman Magazine.

CBRE said to become successful in India, REITS market need strong support from existing investors and the government, it ought to answer few issues such as approval for land bank loans and initial property valuation.

The regulatory feels a new investment avenue in India REITS, being one in developed markets like UK, US, Japan, Singapore and Hong Kong need easier taxation rules to boost new investment opportunities.