Mumbai: The budget proposal exempting the income distributed by a special purpose vehicle (SPV) to real estate investment trust (REIT) having specified shareholding from the payment of dividend distribution tax is expected to encourage public issue and listing of REIT’s in India.
“The DDT got exempted, clearing a final hurdle on the way of the successful listing of REITs in India,” said Anuj Puri, chairman and managing director, JLL India. Mr Puri expects a few listings to happen in the current year itself, either by financial institutions or developers. “Currently, around 229 million sq ft of office space can be seen as REIT-compliant. If we assume that even 50 per cent of these get listed, we are looking at a total REITs listing worth $18.5 mn,” he added.
“This will definitely facilitate investments in the sector and will surely promote many players to opt for REITS as a tool to raise money and bringing in liquidity in the market,” said Rajeev Talwar, CEO, DLF Ltd. The industry has made several representation to the government stating that that the levy of dividend distribution tax at the level of special purpose vehicles (SPV) when it distributes its current income to the business trust makes the business trust structure tax inefficient and adversely impacts the rate of return for the investor.
The introduction of REITs in India would spell scores of opportunities for developers, private funds, financial institutions, among others, as they can be used as an exit, Knight Frank India chairman and managing director Shishir Baijal told news agency, adding that doing away with the DDT has removed the roadblock in launching REIT scheme.
“REIT has finally got its due with the abolishment of the DDT that was holding back asset owners. This is a welcome move for the industry. There will be no roadblock in launching REIT schemes any time now,” he said.
