India eases real estate trust listing rules to boost investment

Unitech

10/07/2014 14:54

By Aditi Shah 
    NEW DELHI, July 10 (Reuters) - India paved the way for the 
stock market listing of real estate investment trusts (REITs) on 
Thursday in a move to boost foreign investment in the property 
sector that has been hit by slowing economic growth. 
    India issued draft regulations for the listing of REITs in 
2008, but was forced to shelve the plans after the global 
financial crisis dried up investor interest and an economic 
downturn dimmed the outlook for real estate investments. 
    A new set of draft guidelines were introduced by the markets 
regulator in October and the final regulation will be drafted 
once the government clears the tax measures proposed in the 
federal budget on Thursday. 
    Streamlining the tax rules will give existing investors such 
as Blackstone Group  BX.N , which is gearing up to introduce a 
trust in India with its local development partner, an option to 
exit some of its investments.  ID:nL4N0P12AQ  
    "I intend to provide necessary incentives for REITS which 
will have pass through for the purpose of taxation," said 
Finance Minister Arun Jaitley in the new government's maiden 
budget for the fiscal year ending in March 2015. 
    This meant the government will clarify corporate tax on 
REITs, which had triggered worries over double taxation, tax 
consultants said. 
    "In the present regime, tax could be levied at multiple 
points which made REITs unviable," said Anish Sanghvi, associate 
director at consultant PwC in India, adding that this is a big 
step forward in introducing REITs. 
    "The budget proposals provide a tax pass through to REITs 
and facilitate a single layer of tax although some more changes 
are required to make it tax efficient for foreign investors." 
    The move will allow developers such as DLF  DLF.NS , Phoenix 
Mills  PHOE.NS  and Prestige Estates  PREG.NS  to tap a new 
avenue of funds by selling finished commercial buildings to 
investors and listing them as a trust. 
    REITs, listed entities that invest mainly in leased office 
and retail assets and distribute most of their income to 
shareholders as dividends, will attract foreign and domestic 
investors including the non-resident Indians, Jaitley said. 
     
 
 (Reporting by Aditi Shah; Editing by Sumeet Chatterjee and 
David Evans) 
 ((aditi.shah@thomsonreuters.com)(+91-11 4178 1031)(Reuters 
Messaging: aditi.shah.thomsonreuters.com@reuters.net)(twitter: 
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Keywords: INDIA BUDGET/REIT