SEBI seeks tax incentives for REITs

Market regulator Securities & Exchange Board of India (SEBI) will ask tax authorities to consider incentives to boost for real estate investment trusts (REITs). SEBI chief UK Sinha told reporters on the sidelines of a conference that for REITs to be successful, they need to be tax efficient, according to a Reuters report. 

This shows the regulator is keen to make REITs a success in India after a previous move fizzled out.

The market regulator had released a first draft of guidelines for REITs in 2008 after which the entire REIT framework was withdrawn to make way for real estate mutual fund (REMF), which eventually did not see the light of the day. 

Earlier this month, SEBI came out with fresh draft guidelines for allowing REITs in India which could open up new funding channels for real estate assets in the country. 

SEBI has said REITs would be allowed only for large assets, to begin with. It has said that for coming out with an initial offer, the size of the assets under the REIT shall not be less than Rs 1,000 crore ($160 million) which is expected to ensure that initially only large assets and established players enter the market.

Further, it has called for a minimum initial offer size of Rs 250 crore and minimum public float of 25 per cent to ensure adequate public participation and float in the units. The minimum public holding norms are in line with listing conditions for firms on the stock exchange. 

As per the guidelines, The REIT shall have to return the money if the initial offer fails to garner at least 75 per cent of the target corpus or less than 20 investors participate in the offer. The units of the REIT would need to be listed within 15 days of the closure of the offer. 

The current draft is open for public comments until October 31, 2013.

Also read

SEBI floats draft norms for allowing REITs in India

(Edited by Joby Puthuparampil Johnson)

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