New Delhi: Real estate companies are feeling the need to pitch in as competing investment avenues. As a result, the tax structure for Real Estate Investment Trusts (REITs) could be similar to that of equity-based mutual funds which are registered under the Indian Trust Act, 1882.
Rajinder Singh Takhar, COO, Paras Build Call
REIT has to operate as a trust that owns and operates income-producing real estate assets such as shopping centres, hotels and offices.
This will enable small investors to participate in real estate and generate income for shareholders through lease rentals and property appreciation, which is a global practice.
Further, these trusts would be permitted to deduct dividends paid to shareholders from their corporate taxable income.
REITs are expected to be exempt from tax keeping the stockholders paying dividend distribution tax.
REITs would be a huge success in India with the market comprising listed Indian real estate companies expected to touch the $5-billion mark in the next 4-5 years, REITs offer a tremendous opportunity.
At the moment, India does not allow REIT-like companies to list on domestic stock exchanges. This needs to be relooked.
Rajinder Singh Takhar is COO, Paras Build-Call Pvt. Ltd