Tax Incentives Key To Success Of Real Estate Investment Trusts: SEBI

Tax incentives are key to the success of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), the Securities and Exchange Board of India (SEBI) has said.

SEBI had notified the norms for listing business trust structures, REITs and InvITs, in September to attract more funds in the real estate sector. Both the trusts will get tax incentives.

"Countries like Singapore and Hong Kong had launched REITs but did not give any tax incentives because of which they did not kick off well. The whole REITs structure is motivated by tax benefit. If it is given, then it will work or else it will not," SEBI Executive Director Ananta Barua said.

Real estate companies and investors have been demanding more clarity on tax structure for REITs and InvITs.

"Taxation is involved at four stages--first while structuring and transferring assets to REITs or InvITs, second when they distribute income to its investors, third when they are traded and fourth time when there is an exit. These are heavy stages so tax issues have to be addressed," said Barua.