|
||
Commercial Realty to Benefit with Easier Debt Financing Norms for REITS | ||
New Delhi, Delhi, India
The commercial real estate industry in the country will get a shot in the arm as the Finance Minister Niramala Sitharaman today said that debt financing of REITs will be enabled by way of making amendments in the current financing models.
While presenting the Union Budget 2021, Sitharaman also said that with a view to make compliance easy, it is proposed to make dividend payment to REIT exempt from the Tax Deducted at Source.
Real Estate Investment Trust (REIT) is a legal entity that owns and operates finances generating commercial property assets like office space and malls. REITs pool in capital from numerous small investors. Markets regulator SEBI had issued guidelines for REITs and InvITs back in 2014. It then revised them in 2016 and again in 2017. Embassy Office Parks REIT became the first REIT to list in India.
“It is to be seen what kind of easing government will carry out in InvITs/REITs. Hopefully, there will be changes in the mandated time gap between two institutional placements, and changes will be made with respect to pricing of units by REITs and InvITs for preferential issues. In view of the pandemic, we expect that there will be relaxations for raising of equity capital. Having said that we hope that the relaxations will be good for the market, and people will see more REITs moving in,” said Ashish Bhutani, MD, Bhutani Group. At present, the quantum of dividend income cannot be calculated precisely by the shareholders for payment of advance tax. Sitharaman proposed to provide that ‘Advance Tax Liability’ on dividend income will arise only post the declaration or payment of dividend.
The Finance Minister said that similar amendments for debt financing will also be made for InvITs. She also proposed to make dividend payment to InvITs exempt from the Tax Deducted at Source, just like she proposed for REITs.
Adding on to the views Mohit Goel, CEO, Omaxe Limited said, “We welcome Budget 2021-22 which lays greater emphasis and outlay on the health, manufacturing and infrastructure sector with an aim to create jobs and boost the economy. State Capitals and tier 2/3 cities will benefit immensely from the government’s focus on sectors like roads and highways, ports, power, urban infrastructure, railways. Add to it, the affordable housing boost, by extending tax holiday for such projects by one year, the deadline for first time homebuyers to avail additional Rs. 1,50,000 interest deduction on home loan and tax exemption for affordable rental housing, will further boost demand for housing in these cities.” Additionally with easing of InvITs/REITs, the sector is set to benefit in multiple ways.
|
||
|
||||||||||||||||
| ||||||||||||||||