Setting up of real estate investment trusts (REITs) have received thumbs up from the realty players. REITs have been in the wish list of developers for long and with SEBI notifying norms for the trusts in September 2014, the roadblock for setting up of the trusts had been cleared. REITs would not only solve the problem of liquidity, but also bring more transparency in the sector.
Tax incentives in upcoming Budget
However, to ensure success of these trusts, real estate companies and developers have asked for more tax incentives for investments through REITs in the upcoming Budget. Real estate developers feel that unless changes are ensured to overcome tax hurdles, REITs cannot achieve their real objective. Therefore, it is time that the Finance Minister addresses this issue in the Union Budget.
Tax incentives to attract domestic investors
The Indian real estate sector is one of the most dynamic sectors of the economy. Domestic players have an integral role to play here. However, the present tax structure for Indian REITs could lead to multiple tax levels for domestic real estate investors. Several other issues need to be addressed. Questions on the initial value of properties along with approvals of large bank loans need to be answered.
Strong support from Government
For the trusts to be successful, it needs a strong support from the Government. REITs will play a vital role in strengthening of the sector. For the Indian realty sector to touch new heights and competitive, REITs will play a crucial role. Once clarifications are achieved, it will be easy to execute investment plans.
The real estate business is at a critical stage. After a slump in the past year, there has been a positive sentiment among investors after the election of a new Government. REITs are important for several big projects and hence, it is the right time to consolidate these trusts.
gopalanenterprises 