Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
General »
Open DEMAT Account in 24 hrs
 How to calculate income tax on stock market gains along with your salary?
 Moonlighting for Additional Income? Know Its Tax Implications
 Have you claimed education cess? Be prepared to pay tax as per the new rules
 Reserve Bank - Integrated Ombudsman Scheme, 2021 (RBIOS, 2021)
 How is tax computed for selling a house?
 How much tax do you pay on equity investments?
 Fuel taxes: Centre s gains striking since FY16
 Tax rules for NRIs on sale of assets located in India
 ITR filing: Know tax rules that apply to freelancers in India
 Delhi Real Estate News: NDMC extends last date for property tax payment with amnesty scheme
 Citizens must file THESE ITR related forms before due date Income Tax Returns

Foreign investors push for tax breaks to list Indian REITs
September, 10th 2014

Large FDI providers in real estate have approached the finance ministry seeking tax changes to the current framework for Indian real estate investment trusts (REITs). The recently unveiled structure reduces cash in the hands of shareholders by almost one-fifth compared to a listing in Singapore, they told the government officials in recent meetings.

REITs allow investors to own shares in rent yielding real estate assets that are listed on the bourses. These investment trusts are touted as being potential game changers for the realty and infrastructure sectors, which are facing liquidity pressures.

But the current tax heavy framework could see some of India's largest commercial assets owners like Embassy Office Parks, RMZ Offices and K Raheja Corp veering towards a listing in Singapore.

Global pension funds, sovereign wealth managers and private equity houses like Canadian Investment Pension Plan, Qatar Investment Authority and Blackstone are prolific backers of Indian commercial assets.

India has the potential to list about 170 million sqft of rent-yielding assets through REITs, of the total 370 million sqft of Grade A office stock in the country.

"Unlike countries such as Singapore, UK and US where tax incidence is a major pass through, in India it's a partial pass through. This is a challenging scenario and not a very promising one for investors in India as of now," said Anuj Puri, country head of consultancy firm JLL India.

At constant market multiples, Singapore listed REITs put 19% more cash in the hands of shareholders as compared to an Indian REIT. Puri added that the level of challenge from Singapore would depend on how tax-efficient the Indian REIT structure can become for investors.

Singapore shines on account of a lower tax regime for REITs, which is overall 12.5% less than what the Indian regulator has put in place. Besides the 10% withholding tax, the foreign investors are wary of the 7.5% dividend distribution tax and the 'further income tax' that has been proposed.

The ongoing discussions with the finance ministry officials involves tax free dividend payout and no 'further income tax ' on unit holders.

"Clarifying the tax structure is of high importance at the moment because a successful India REIT market will require strong support from existing landlords and investors," said Anshuman Magazine, CMD of property consultancy CBRE South Asia.

In July, TOI reported that Bangalore-based RMZ Offices was readying for a REIT listing either in Singapore or India, and would eventually pick a market that puts more money in the hands of shareholders.

Deepak Chhabria, MD - finance, RMZ Corp, said, "We are engaged with relevant authorities for clarifications on the recently announced REIT regulations." He didn't wish to elaborate on where the company plans to list its REIT, which is backed by Qatar Investment Authority.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2023 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting