The newer asset class of business trusts which includes Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) stand to benefit from the Budget 2024 as it makes the long-term holding period for tax considerations uniform with the rest of the equity market.
Infrastructure trust IndiGrid’s CEO Harsh Shah said, “We welcome this significant rationalisation of the taxation for business trusts in this Budget. InvITs/REITs getting taxed at parity with equities will offer investors uniform taxation to invest in superior risk-adjusted platforms. We believe that this will also enable InvITs and REITs to form part of indices and add significant liquidity.”
There are four REITs listed in India so far and the companies recently formed an industry body for a concerted effort to enhance their reach, the Indian REIT Association (IRA). Aravind Maiya, CEO of Embassy REIT said, “We are extremely pleased with today's budget announcement, which is a very positive development for Indian REITs. Reducing the holding period for long-term capital gains from 36 months to 12 months puts us at par with listed equity shares, further popularising the REIT asset class in India. Over the last five years, REITs have taken off in a big way, with around 2.3 lakh investors across all the 4 REITs today, and this move further enhances investor participation.”
REIT as an investment product found a cheerleader in none other than SEBI chairperson Madhabi Puri Buch, who called it one of her "favourite products for the future". REITs, Infrastructure Investment Trusts (InvIT), and municipal bonds combined will become as big as India's equity markets in the next 10-15 years, the capital markets regulator's chief said.
