Realty sector seeks more tax sops on REITs
Realtors' apex body CREDAI Chairman Lalit Kumar Jain said: "We have got through pass through status. We need clarity with respect to double taxations"
Feb 05, 2015
Source : Business Standard

 

New Delhi: To ensure success of newly created REIT (Real Estate Investment Trust) structure, property developers and consultants have sought more tax incentives in the upcoming union budget on investments through this route.

In September 2014, market regulator SEBhad notified norms for listing of new business trust structure REITs that would help attract more funds in a transparent manner into the realty sector.

The norms were notified after Finance Minister Arun Jaitley, in the last year's budget, had provided REITs the 'pass through' status for the purpose of taxation.

In its pre-budget wish-list, JLL India Chairman and Country Head Anuj Puri said: "Until vital changes to overcome the tax hurdles, REITs - which can literally be a life-saver for Indian real estate - cannot take off. In the interest of the real estate sector as well as the overall economy, the Budget must address this issue".

Realtors' apex body CREDAI Chairman Lalit Kumar Jain said: "We have got through pass through status. We need clarity with respect to double taxations".

He also said the state governments should provide some incentives such as lower stamp duty on properties under REITs.

Global property consultant CBRE South Asia CMD Anshuman Magazine said the industry is anticipating taxation clarifications for REITs to begin functioning in the country.

Much needs to be done on the tax structures of this instrument for it to become more efficient for domestic as well as overseas investors, he added.

"... The proposed tax structure for India REITs is biased towards overseas investors and could potentially translate into multiple tax levels for domestic investors," he said.

Magazine listed other challenges, including a corporate payable by the sponsor at the entry level followed by a possible tax leakage of 35-40 per cent on normal income, and a capital gains tax on the sale of REIT units by the sponsor at the exit level.

"All such taxation factors, among others, have in unison kept back market players from investing in the real estate sector through REITs," Magazine noted.

For REITs to become a success in India, CBRE said that issues like analyst coverage for this instrument in India, initial property valuations, and approvals of large bank loans for the holding trusts, need to be answered.

Stating that REIT market would require strong support from the government and existing investors, CBRE said: "The real estate investor community, hence, awaits clarifications related to taxation and regulations so that execution timelines and investment strategies may be planned ahead."

REITs, a new investment avenue in India on the lines of one in developed markets like the US, UK, Japan, Hong Kong and Singapore, can be listed and trading would be allowed in units of REITs like any other security on stock exchanges.

Latest Realty News

Developed-plots-soon-for-farmers
Feb 05, 2015
NOIDA: The Greater Noida Authority will find developed plots to compensate farmers closest to their villages
Three-spots-picked-for-smart-city-pilot-project
Feb 05, 2015
NEW DELHI: Three areas in Delhi would be taken up as models for developing the capital as a smart city
Real-estate-business-yet-to-pick-up-in-East-Godavari
Feb 05, 2015
Hyderabad: It is an interesting phenomenon in East Godavari that even after bifurcation of the State and announcement of many national institutions, real estate business has not picked up
Home-sales-in-top-6-cities-slip-8%-in-Dec-quarter,-but-prices-continue-to-rise
Feb 05, 2015
MUMBAI/NEW DELHI: Home sales fell 8 per cent across the top six cities of the country in the quarter to December, according to property research firm Liases Foras
Realty-bites:-Noida-land-rates-up-by-18-per-cent
Feb 05, 2015
NOIDA: Land allotment rates in Noida were increased by a steep 18.4 per cent that coincides with the state paying additional compensation to farmers
Tata-group-keen-to-take-part-in-Telangana-projects
Feb 05, 2015
Hyderabad: The Tata group has shown interest in participating in many of the flagship projects of the Telangana government
Land-law:-Exemptions-extended-to-private-firms
Feb 05, 2015
New Delhi: The National Democratic Alliance (NDA) government's land ordinance has done away with consent and social impact assessment for acquisition of land by the private sector for a vast array of projects
Puravankara-to-develop-housing-project-in-Mumbai-suburb
Feb 04, 2015
NEW DELHI: Puravankara Projects Ltd has entered into a joint development agreement to develop a housing project
Cisco-to-help-AP-in-making-Vizag-a-smart-city
Feb 04, 2015
Hyderabad: Global information technology networking major Cisco Systems has evinced interest in working with the Andhra Pradesh government in transforming Visakhapatnam as a smart city
Investors-seek-CM-help-in-stalled-realty-project
Feb 04, 2015
NAGPUR: This may be another case of investors losing their money in a real estate project

Latest Realty News Of State

Realty Talk's