DDT exemption will pave way for REITs launch: Experts

Finance Minister Arun Jaitley's proposed removal of dividend distribution tax has received a thumbs-up from the real estate sector which has been looking for a clarity to launch Real Estate Investment Trusts (REITs) for raising funds.

PTI| Updated: Feb 29, 2016, 16:36 PM IST
DDT exemption will pave way for REITs launch: Experts

 Mumbai: Finance Minister Arun Jaitley's proposed removal of dividend distribution tax has received a thumbs-up from the real estate sector which has been looking for a clarity to launch Real Estate Investment Trusts (REITs) for raising funds.

 

"DDT is considered to be one of the biggest hurdles left in making REITs financially viable. The government has already taken various steps to ease path for REITs. With most of the hurdles getting removed, we may see introduction of REITs here soon," Colliers International India Senior Associate Director, Research, Surabhi Arora said.

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 said, 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.

With removal of DDT on REITs special purpose vehicle, the REITs structure of India is now at par with global regulations, KPMG India Head of Real Estate and Construction, Neeraj Bansal said.

"REITs take-off is expected to improve liquidity situation in the real estate sector as it would ease exit for developers from completed properties," he said.

Appreciating the initiatives taken by the Finance Minister, PwC India Partner-Tax, Abhishek Goenka said, "exemption from dividend distribution tax in the REIT structure demonstrates the intent of the government to promote listing of REITs. With this exemption being introduced, REIT listing should not be too far from becoming a reality."

 

Choice International Managing Director Kamal Poddar said there could be a shift from mutual funds to REITs after the exemption of DDT.

"The decision to scrap dividend distribution tax on REITs may make it easier for home developers to raise funds by making investments in it more attractive. It would pave way for more REIT funds being launched, which was so far being subdued. Retail investors may see some shift from mutual funds to REIT, to some extent," he said.