{"id":9202,"date":"2025-06-21T19:07:25","date_gmt":"2025-06-21T19:07:25","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=9202"},"modified":"2025-06-21T19:11:41","modified_gmt":"2025-06-21T19:11:41","slug":"taxation-of-real-estate-investment-trusts-reits-in-india","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/","title":{"rendered":"Taxation of Real Estate Investment Trusts (REITs) in India"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-9204\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real-.jpg\" alt=\"REITs\" width=\"1282\" height=\"471\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real-.jpg 1282w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real--300x110.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real--1024x376.jpg 1024w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real--768x282.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/06\/Real--800x294.jpg 800w\" sizes=\"(max-width: 1282px) 100vw, 1282px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d8a65eabd29\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d8a65eabd29\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Overview_Taxation_of_Real_Estate_Investment_Trusts_REITs_in_India\" title=\"Overview &amp; Taxation of Real Estate Investment Trusts (REITs) in India\">Overview &amp; Taxation of Real Estate Investment Trusts (REITs) in India<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#What_Are_Real_Estate_Investment_Trusts\" title=\"What Are Real Estate Investment Trusts ?\">What Are Real Estate Investment Trusts ?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Regulatory_Framework_of_Real_Estate_Investment_Trusts\" title=\"Regulatory Framework of Real Estate Investment Trusts\">Regulatory Framework of Real Estate Investment Trusts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#What_Is_a_Special_Purpose_Vehicle_SPV\" title=\"What Is a Special Purpose Vehicle (SPV)?\">What Is a Special Purpose Vehicle (SPV)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Benefits_of_Investing_in_Real_Estate_Investment_Trusts\" title=\"Benefits of Investing in Real Estate Investment Trusts \">Benefits of Investing in Real Estate Investment Trusts <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Challenges_in_Real_Estate_Investment_Trusts\" title=\"Challenges in Real Estate Investment Trusts\">Challenges in Real Estate Investment Trusts<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Taxation_of_Real_Estate_Investment_Trusts_Income_as_of_FY_2024-25\" title=\"Taxation of Real Estate Investment Trusts Income (as of FY 2024-25)\">Taxation of Real Estate Investment Trusts Income (as of FY 2024-25)<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Types_of_Income_from_Real_Estate_Investment_Trusts\" title=\"Types of Income from Real Estate Investment Trusts\">Types of Income from Real Estate Investment Trusts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caindelhiindia.com\/blog\/taxation-of-real-estate-investment-trusts-reits-in-india\/#Capital_Gains_Tax_on_Sale_of_Real_Estate_Investment_Trusts_Units\" title=\"Capital Gains Tax on Sale of Real Estate Investment Trusts Units\">Capital Gains Tax on Sale of Real Estate Investment Trusts Units<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Overview_Taxation_of_Real_Estate_Investment_Trusts_REITs_in_India\"><\/span><span style=\"color: #000080;\"><strong>Overview &amp; Taxation of Real Estate Investment Trusts (REITs) in India<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"What_Are_Real_Estate_Investment_Trusts\"><\/span><span style=\"color: #000080;\"><strong>What Are Real Estate Investment Trusts ?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>REITs (Real Estate Investment Trusts) are investment vehicles that allow individuals to invest in income-generating commercial real estate\u2014such as office spaces, malls, warehouses\u2014without owning physical property. Real Estate Investment Trusts are an excellent way to diversify a portfolio and gain exposure to India\u2019s commercial real estate market without taking on ownership risks. However, understanding the layered taxation framework is essential for maximizing returns and avoiding surprises at the time of filing. Keep detailed breakup statements issued by the REIT (like Form 64B) and consult your tax advisor before the ITR filing season.<\/p>\n<p><span style=\"color: #000080;\"><strong>Real Estate Investment Trusts (REITs)<\/strong>:<\/span><\/p>\n<ul>\n<li>Operate similar to mutual funds but invest in real estate assets instead of stocks\/bonds.<\/li>\n<li>Pool funds from multiple investors to invest in large-scale properties.<\/li>\n<li>Offer income via rent, interest, dividends, or capital gains.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Major Indian Real Estate Investment Trusts (REITs)<\/strong>:<\/span><\/p>\n<ul>\n<li>Embassy Office Parks REIT<\/li>\n<li>Mindspace Business Parks REIT<\/li>\n<li>Brookfield India REIT<\/li>\n<li>Nexus Select Trust REIT<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Regulatory_Framework_of_Real_Estate_Investment_Trusts\"><\/span><span style=\"color: #000080;\"><strong>Regulatory Framework of Real Estate Investment Trusts<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Real Estate Investment Trusts and InvITs are regulated by SEBI and structured as trusts. They act as pass-through vehicles to avoid double taxation. However, taxation varies based on Nature of the income and Whether the SPV has opted for the Section 115BAA concessional tax regime, Real Estate Investment Trusts in India are governed by SEBI (REIT) Regulations, 2014. Key entities involved:<\/p>\n<ul>\n<li>Sponsor: Promotes and sets up the REIT.<\/li>\n<li>Manager: Manages REIT assets and operations.<\/li>\n<li>Trustee: Holds assets for the benefit of unitholders; must be independent and SEBI-registered.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"What_Is_a_Special_Purpose_Vehicle_SPV\"><\/span><span style=\"color: #000080;\"><strong>What Is a Special Purpose Vehicle (SPV)?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>REIT Eligibility Criteria<\/p>\n<table>\n<thead>\n<tr>\n<td>Criteria<\/td>\n<td>Description<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Trust Formation<\/td>\n<td>Must be registered with SEBI as a trust<\/td>\n<\/tr>\n<tr>\n<td>Mandatory Listing<\/td>\n<td>Must be listed on a recognised stock exchange<\/td>\n<\/tr>\n<tr>\n<td>Investment Focus<\/td>\n<td>\u2265 80% in income-generating properties; \u2264 20% in under-construction assets, bonds, etc.<\/td>\n<\/tr>\n<tr>\n<td>Distributions<\/td>\n<td>\u2265 90% of net distributable cash flows must be distributed semi-annually<\/td>\n<\/tr>\n<tr>\n<td>No Cross-Investment<\/td>\n<td>Cannot invest in units of other REITs<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>SPV is an Indian company through which REITs hold real estate assets. Eligibility:<\/p>\n<ol>\n<li>REIT must hold \u2265 50% of SPV\u2019s equity.<\/li>\n<li>SPV must hold \u2265 80% of its assets directly in properties.<\/li>\n<li>SPV should not invest in other SPVs and must solely engage in real estate development\/ownership.<\/li>\n<\/ol>\n<h3><span class=\"ez-toc-section\" id=\"Benefits_of_Investing_in_Real_Estate_Investment_Trusts\"><\/span><span style=\"color: #000080;\"><strong>Benefits of Investing in Real Estate Investment Trusts <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Liquidity: Traded on stock exchanges<\/li>\n<li>Diversification: Access to high-value commercial real estate<\/li>\n<li>Transparency &amp; Regulation: SEBI oversight<\/li>\n<li>Passive Income: Steady income through mandated distributions<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Challenges_in_Real_Estate_Investment_Trusts\"><\/span><span style=\"color: #000080;\"><strong>Challenges in Real Estate Investment Trusts<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>No major tax shelters: Income taxed as regular income in most cases<\/li>\n<li>Market-linked returns: Sensitive to real estate cycles and interest rates<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Taxation_of_Real_Estate_Investment_Trusts_Income_as_of_FY_2024-25\"><\/span><span style=\"color: #000080;\"><strong>Taxation of Real Estate Investment Trusts Income (as of FY 2024-25)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"color: #000080;\"><strong>Before July 23, 2024<\/strong>:<\/span><\/p>\n<ul>\n<li>STCG @15%<\/li>\n<li>LTCG @10% (exempt up to \u20b91 lakh\/year)<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Budget 2023 &amp; 2024 Updates<\/strong><\/span><\/p>\n<ul>\n<li>Budget 2023: Introduced taxation on loan repayment\/capital return (previously untaxed) as \u2018Income from Other Sources\u2019.<\/li>\n<li>Budget 2024 (effective July 23, 2024):\n<ul>\n<li>Raised STCG to 20%<\/li>\n<li>Raised LTCG to 12.5% (with higher exemption)<\/li>\n<li>Removed indexation benefits for all REIT gains<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Types_of_Income_from_Real_Estate_Investment_Trusts\"><\/span><span style=\"color: #000080;\"><strong>Types of Income from Real Estate Investment Trusts<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table>\n<thead>\n<tr>\n<td><strong>Income Type<\/strong><\/td>\n<td><strong>\u00a0<\/strong><\/td>\n<td><strong>Tax Treatment<\/strong><\/td>\n<td><strong>TDS Provisions<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>1. Rental Income (REIT only)<\/td>\n<td><\/td>\n<td>Taxed in hands of unitholder as \u2018Income from Other Sources\u2019 at slab rate<\/td>\n<td>10% TDS<\/td>\n<\/tr>\n<tr>\n<td>2. Interest Income<\/td>\n<td><\/td>\n<td>Taxed in hands of unitholder as \u2018Income from Other Sources\u2019 at slab rate<\/td>\n<td>5% TDS (NRI) \/ 10% (Resident)<\/td>\n<\/tr>\n<tr>\n<td>3. Dividend Income<\/td>\n<td><\/td>\n<td>a) If SPV opted for concessional tax (115BAA): Taxable in hands of unitholder as per slab; 10% TDS applies<br \/>\nb) If not opted: Dividend is tax-exempt<\/td>\n<td>10% TDS if taxable<\/td>\n<\/tr>\n<tr>\n<td>4. Loan Repayment \/ Return of Capital<\/td>\n<td><\/td>\n<td>a) Budget 2023: Now taxable as \u2018Income from Other Sources\u2019 at slab rate<br \/>\nb) If not taxed at distribution, reduces cost of acquisition, increasing capital gains later<\/td>\n<td>No specific TDS, but must be tracked for cost adjustments<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"color: #000080;\"><strong>Dividend Income <\/strong><\/span><\/p>\n<table>\n<thead>\n<tr>\n<td><strong>SPV Status<\/strong><\/td>\n<td><strong>Tax Treatment<\/strong><\/td>\n<td><strong>TDS<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Opted for Section 115BAA<\/td>\n<td>Taxable in hands of unitholder as per slab<\/td>\n<td>10% (if dividend &gt; \u20b95,000; \u20b910,000 from FY 25-26)<\/td>\n<\/tr>\n<tr>\n<td>Not opted for 115BAA<\/td>\n<td>Exempt for unitholder<\/td>\n<td>No TDS<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"color: #000080;\"><strong>Interest Income<\/strong><\/span><\/p>\n<ul>\n<li>Taxed at slab rates for resident unitholders.<\/li>\n<li>TDS: 10% (if &gt; \u20b95,000; \u20b910,000 from FY 25-26)<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Rental Income (Real Estate Investment Trusts only)<\/strong><\/span><\/p>\n<ul>\n<li>Treated as Income from Other Sources<\/li>\n<li>Taxed at slab rate of unitholder<\/li>\n<li>TDS: 10%<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Capital_Gains_Tax_on_Sale_of_Real_Estate_Investment_Trusts_Units\"><\/span><span style=\"color: #000080;\"><strong>Capital Gains Tax on Sale of Real Estate Investment Trusts Units<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<table>\n<thead>\n<tr>\n<td>Holding Period<\/td>\n<td>Before July 23, 2024<\/td>\n<td>On or After July 23, 2024<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Short-Term Capital Gain (\u2264 12 months)<\/td>\n<td>15% (u\/s 111A)<\/td>\n<td>20% (Flat rate)<\/td>\n<\/tr>\n<tr>\n<td>Long-Term Capital Gain (&gt; 12 months)<\/td>\n<td>10% (Exempt up to \u20b91 lakh\/year)<\/td>\n<td>12.5% (Exempt up to \u20b91.25 lakh\/year)<\/td>\n<\/tr>\n<tr>\n<td>Indexation<\/td>\n<td>Not Available<\/td>\n<td>Not Available<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><strong>\u00a0<\/strong><strong>Capital Gains on Sale of Real Estate Investment Trusts Units<\/strong><\/p>\n<table style=\"height: 202px;\" width=\"830\">\n<thead>\n<tr>\n<td>Type<\/td>\n<td>Holding Period<\/td>\n<td>Tax Rate<\/td>\n<td>Exemption Limit<\/td>\n<td>Indexation<\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>STCG<\/td>\n<td>\u2264 12 months<\/td>\n<td>20% (from July 23, 2024)<\/td>\n<td>None<\/td>\n<td>\u274c<\/td>\n<\/tr>\n<tr>\n<td>LTCG<\/td>\n<td>&gt; 12 months<\/td>\n<td>12.5% (from July 23, 2024)<\/td>\n<td>\u20b91.25 lakh\/year<\/td>\n<td>\u274c<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Overview &amp; Taxation of Real Estate Investment Trusts (REITs) in India What Are Real Estate Investment Trusts ? REITs (Real Estate Investment Trusts) are investment vehicles that allow individuals to invest in income-generating commercial real estate\u2014such as office spaces, malls, warehouses\u2014without owning physical property. Real Estate Investment Trusts are an excellent way to diversify a &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[173],"tags":[1190],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9202"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=9202"}],"version-history":[{"count":3,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9202\/revisions"}],"predecessor-version":[{"id":9206,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/9202\/revisions\/9206"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=9202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=9202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=9202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}