HomeNewsCommercial real estate industry will get a boost

Commercial real estate industry will get a boost

The commercial real estate industry in the country will get a shot in the arm as Finance Minister Nirmala Sitharaman has told in her budget speech that the debt financing of REITs will be enabled by way of making amendments in the current financing models. While presenting the Union Budget 2021, Sitharaman also said that with a view to make compliance easy, it is proposed to make dividend payment to REIT exempt from the Tax Deducted at Source.

Real Estate Investment Trusts (REITs) operate almost like a mutual fund by pooling funds from investors and investing them in real estate assets. REITs are investment trusts that work similar to mutual funds with the only big difference being that instead of using the money collected from investors to buy stocks and bonds, in case of REITs capital is deployed to own real estate assets. The Trust will earn either from capital appreciation or through rentals on commercial properties like office, shops, malls and hotels. While rentals provide quick and regular returns, capital gains are usually long term in nature. It should be noted that REIT is essentially a framework for completed and revenue generating assets.

The Finance Minister said that similar amendments for debt financing will also be made for InvITs. She also proposed to make dividend payment to InvITs exempt from the Tax Deducted at Source, just like she proposed for REITs.

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