REITs

The proposed tax change could make REIT and InvIT dividends tax-free for investors regardless of the tax regime chosen by the underlying SPV. However, interest and other components of distributions will remain taxable, so investors must check the payout breakup before calculating post-tax returns.

REITs are often mistaken for fixed-income products due to their regular payouts, but they carry equity-like risks. Their returns depend on rental income, occupancy and property cycles, making them a diversification tool rather than a substitute for debt investments.

REITs and REIT mutual funds offer investors exposure to the real estate sector but differ in structure, taxation, and returns. While REITs focus on rental income from properties, REIT funds combine REIT exposure with real estate equities.

The REIT index fund provides access to commercial real estate at a low cost, with diversification and liquidity, and in a tax-efficient manner.

Report REIT and InvIT income in your ITR for AY 2026‑27. Know the tax treatment, choose the right form and keep essential documents ready to avoid mistakes before the 31 July deadline.

The same real estate exposure can result in different post-tax returns. REIT mutual funds and listed REITs offer a shorter holding period for long-term capital gains than direct property, while differences in income taxation and TDS can further impact investor returns.

Edelweiss Mutual Fund has launched India's first REIT-oriented mutual fund, with the NFO opening on August 5. The passive fund will track the Nifty REITs & Realty Total Return Index, offering exposure to listed REITs and real estate companies through a single investment.

The regulatory framework for REITs and InvITs has improved a lot. As a result, mutual funds have increased their exposure to them. Going ahead, with the listing of new REITs and InvITs in existing and new sectors, investors will have a wide variety of options to choose from.