The Securities and Exchange Board of India (Sebi) is likely to finalise norms for real estate or infrastructure investment trusts at its upcoming board meeting in New Delhi on August 9, paving the way for such entities to list on the exchanges in what could boost infrastructure financing.
“The REIT/InvIT norms may be finalised and approved in the upcoming Sebi board meeting, and the norms are likely to be notified around 15 days from now,” a senior finance ministry official told FE.
REITs/InvITs are entities which list units on an exchange and use the proceeds from unit holders to invest in real estate and infrastructure projects. While such a model is in vogue across most developed economies, it is the first time that such trusts will enter India. REITS/InvITs will help developers monetise commercial assets, attract domestic and foreign capital and help large developers plan long-term projects.
While Sebi had already drawn up draft guidelines for REITs in 2013, the official said that the market regulator was awaiting clarification on pass-through status for REITs/InvITs from the finance ministry.
The clarification came when finance minister Arun Jaitley announced the pass-through status for REITs/InvITs in his Budget speech. Under the taxation incentives proposed for REITs, interest income derived out of REITs for the unit holder would have pass through status while capital gains and dividend distribution will be taxed.