Skip to main content

Real Estate Investment Trust (REIT)

 

What is Real Estate Investment Trust?

Real Estate Investment Trust is a mutual funds for Real Estate. Under mutual funds underlying assets are equity and debts, similarly REIT will have the real estate as its underlying assets fetching rental incomes.

How to Incorporate:

  1. Trust should be registered under Registration Act 1908.
  2. Trust deed has its main objective as undertaking activity of REIT.
  3. Trust deed should specify the responsibilities of the Trustee.

Application to Whom:

Applicant (Trust) sends application in Form A to SEBI for registration.

  1. Application fees is Rs.1,00,000/- (Non-refundable)
  2. After getting intimation from the SEBI further non-refundable fees Rs.10,00,000/- to be paid.

Parties to the REIT:

  1. Sponsors:
    a) Sponsor should be one person but not more than 3 persons and each of the sponsors holding or proposing to hold not less than 5% of the number of units of REIT post issue basis and
    b) Net worth on collective basis not less than 100 crores, provided each sponsor should has a net worth not less than 20 crores and
    c) Should have not less than 5 years of experience in development of real estate or fund management in real estate.
  1. Manager:
    a) The Manager of REIT may be body corporate, company or LLP.
    b) Should have 5 years of experience in fund management or advisory services or property management in real estate industry.
  1. Trustee:
    Trustee should registered with SEBI and not an associate of the sponsors or manager.

Note:

  • Sponsors, Manager and Trustee should be separate entity.

How REIT function?

REIT can directly invest in Income generating commercial property or Invest through SPV.

Special Purpose Vehicle (SPV):

  • LLP or company set up by REIT and having controlling interest not less than 50% of the equity share capital or interest.
  • SPV should hold at least 80% of wealth in properties not in other SPV.
  • SPV should not engage in any other activity other than developing or holding property.
 

Structure of REIT:

Structure of REIT in India

How REIT raise funds:

  1. REIT raise fund from any investors either in India or foreign.
  2. Investors has to invest at least Rs.2,00,000/- Minimum unit size should be Rs.1,00,000/- i.e. investors should hold at least two units.
  3. There should at least 200 investors for a REIT.

Conditions for REIT:

Not less than 75% revenue of REIT should be from rental income, leasing and letting of real estate assets, other than Capital gains on disposal of properties.

Income of REIT:

  1. Rental income from direct investment in real estate properties.
  2. Capital gain from sale of real estate properties.
  3. Dividend income from SPV.
  4. Interest income from loan advanced to SPV.

REIT Investment Condition:

Not more than 20% of REIT assets in

  1. Developmental properties (Property held by REIT not less than 3 years and leased out)
  2. Listed and unlisted debt of companies.
  3. Equity shares of company not less than 75% of its activities from real estate field.
  4. Government securities.

Not less than 80% of the Value of REIT assets should be invested in completed revenue generating properties.

Note:

The Investment by a REIT shall only be in SPVs or Properties or securities in India other than Vacant land or Agricultural land or mortgages.

Taxability in the Hands of REIT:

Under section 115 UA distributed income of REIT to be taxed in the hands of investors in the same nature as in hands of REIT.

  1. Interest income fully exempt under section 10(23FC).
  2. Long term capital gain taxable @ 20% short term gain @15%
  3. Other income taxable at 30%.
  4. Dividend received by REIT from SPV is exempt provided SPV should pay DDT.

Taxability in the hands of Investors:

  1. Interest Income received from REIT is fully taxable.
  2. Any Other income is fully exempt.

Initial Public offer condition:

  1. REIT registered under SEBI.
  2. Value of assets hold by REIT not less than 500 Crores.
  3. Units proposed to be offered to public not less than 25% of the total outstanding units of REIT and offered only by offer document.
  4. Offer size is not less than 250 crores.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

Invest in Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...
Read more

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...
Read more

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...
Read more

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...
Read more

8% Government of India Bonds quick guide

For those seeking comfort in safety of returns, the Government of India issued 8% savings bond once again comes to the fore. First launched in 2003, these bonds are issued by the government with a maturity of 6 years. The bonds are available at all times with specified distributors through whom you can apply to invest in them. Here is a quick guide to what the bond offers and its features to ascertain to check for suitability. What are Government of India bonds Government of India bonds are like any other government bonds with specified rate of interest. The rate is fixed at 8% per annum paid half yearly, or you can opt for cumulative payment of interest at the end of the tenure. You can buy these bonds from State Bank of India and its associates, other nationalized banks and some private sector banks such as HDFC Bank Ltd and ICICI Bank Ltd, among others. The bonds can be bought from the offices of Stock Holding Corporation of India as well. They are available in physical form onl...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now