It was earlier reported that the government is mulling tax breaks for launching real estate investment trusts or REITs in the upcoming budget.

Sources suggest that the finance ministry and the central board of direct taxes or CBDT is finalising tax incentives for REITs.

There maybe no corporate tax exemption for REITs but a divident distribution tax or DDT exemption is likely if the REIT directly owns 100 percent of realty assets.

In addition, trading of REIT units may get the same tax treatment as equities. Therefore, an exemption from paying securities transaction tax is unlikely. There may however be tax exemptions at the time of creation of the REIT and when the REIT distributes the rental income of the realty assets to investors.

However, the investors’ taxation rate for receiving that income will depend on their status whether they are a corporate, an Indian individual or a non-resident individual and so on.