Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: ACCOUNTING STANDARD :: TDS :: empanelment :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: VAT RATES :: articles on VAT and GST in India :: due date for vat payment
 
 
Direct Tax »
 No change in gold seizure norms in proposed I-T Law amendments
 Direct tax collection will get a long-term boost, Franklin Templeton says
 I-T Act amendments upset calculations of cash hoarders
 Claim tax benefit on costs incurred to evict tenants
 The Integrated Goods And Services Tax Act, 2016
 Here’s what Income Tax Department did leading up to demonetisation
 I-T department asks IDS declarants to pay tax by November 30
 Cash trove tax drive dilemma
  CBDT halves Income Tax refunds issue timeline to 15 days for this fiscal
 CBDT signs four unilateral advance pricing agreements
 Central Board of Direct Taxes allowed Rs 4,500 crore of irregular benefits to infrastructure companies: CAG

Developers seek dividend distribution tax relief
February, 25th 2016

After getting relief from capital gains tax and minimum alternate tax last year, developers now seek exemption from the dividend distribution tax (DDT) for real estate investment trusts (Reits) in the coming Budget, to make them attractive for investors. Despite tax concessions last year, Reits have not taken off.

Realtors say after paying almost 20 per cent DDT, rate of return on these units are not lucrative compared with other investments. Currently, after DDT, Reits give 6.5 per cent return to investors, which would not be viable to run Reits. This is so because that much interest rate could be easily earned in bank deposits. For instance, State Bank of India’s 5-10 year deposits draw an interest rate of seven per cent a year.

Hemal Mehta, partner, Deloitte Haskins & Sells, said: “Most amendments to the Reit taxation have been incorporated in the income tax Act, but the critical issue on DDT has not been addressed as yet.”

Property consultant CBRE, too, demands DDT exemption. “Despite several announcements relating to the taxation structure for domestic Reits in the previous Budget, they continued to fall short of industry expectations,” said Anshuman Magazine, chairman and managing director of CBRE South Asia, in a statement.

He said in its current form, imposition of DDT and stamp duties would lower the valuation of Reits, making the newly created structure unviable and unattractive for overseas as well as domestic investors.

“Essentially, the pricing and quality of assets will be crucial for the successful launch of the Reit market in India,” said CBRE.

The Securities and Exchange Board of India has allowed Reits to attract funds in a transparent manner into the realty sector.

Last year, the Budget had given them exemption from capital gains tax. However, after pressure from the sector, finance minister Arun Jaitley provided exemption from MAT on notional gains as well.

"I propose to provide for exemption from levy of MAT on gains and losses arising from exchange of shares with the units of a business trust Reits," he had said.

The liability under MAT will arise only on actual transfer of such units.

After this clarity, realty giant DLF announced plans to float Reits to raise Rs 6,000 crore over two years. Besides, a few developers from Mumbai had also said they would come out Reits.

Also, a joint venture between private equity firm Blackstone and real estate group Embassy had decided to shelve plans to list a $2-billion Reit in India due to tax issues.

“The tax structure would have made it quite unattractive,” Mike Holland, chief executive of Embassy Office Parks, had said.

The joint venture has 27 million sq ft of office assets. Its planned Reit was aimed at unlocking value in these assets.

In Reits, pooled funds are invested in specific projects. Reit unit holders earn returns from value appreciation or rental income of these projects.

Reits are similar to mutual funds, and can be listed and traded on stock exchanges. These have to distribute a majority of their income as dividend. Reits are required to distribute 90 per cent of their lease rental income to unit holders and, hence, DDT becomes important.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Custom Software Development Outsourcing Custom Software Development Offshore Cus

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions