How is REIT taxed in India?

The interest and dividends received by the Reit/InvIT from the SPVs is exempt from tax. The Reit is also exempt from tax on its rental income, which it may have earned if it owned a property directly. Rental income of the Reit is exempt in its hands, but taxable in the hands of the investors.

How is income from REITs taxed?

The majority of REIT dividends are taxed as ordinary income up to the maximum rate of 37\% (returning to 39.6\% in 2026), plus a separate 3.8\% surtax on investment income. Taking into account the 20\% deduction, the highest effective tax rate on Qualified REIT Dividends is typically 29.6\%.

Do REITs file tax returns?

Generally, a REIT must file its income tax return by the 15th day of the 4th month after the end of its tax year. A new REIT filing a short period return must generally file by the 15th day of the 4th month after the short period ends.

How do REITs distribute income India?

The crux of REITs is to give investors the dividends generated from capital gains that are accrued from the selling of commercial assets. The REIT allocates 90\% of its income as dividends to its investor’s. It provides a safe and diversified investment opportunity to get into real estate investments.

Why do REITs not pay taxes?

Legally, a REIT must annually distribute at least 90\% of its taxable income in the form of dividends to its stockholders. This allows REITs to pass on their tax burden to shareholders rather than pay federal taxes themselves.

Where do I report REIT income on tax return?

If you own shares in a REIT, you should receive a copy of IRS Form 1099-DIV each year. This tells you how much you received in dividends and what kind of dividends they were: Ordinary income dividends are reported in Box 1. Capital gains distributions are generally reported in Box 2a.

Which REIT is best in India?

3 Listed REITs Stocks In India 2021

How can I buy REIT units in India?

REITs are listed and traded on stock markets just like Exchange Traded Funds (ETFs), as a result, purchasing units on the stock market is the best way to invest. Thus, a Demat Account is mandatory for investing in REITs in India.

What are the tax implications of REITs in India?

There are no proper standards,procedures or benchmarks in India for property valuations. The dividends distributed by REITs are tax free in the investors’ hands. REITs will pay the dividend distribution tax. W.E.F 1st April 2020, the dividends are taxable in the investors’ hands.

Do REITs pay tax on rental income?

Similarly, distribution made from any rental income from properties directly held by the REIT, are chargeable in the hands of the unitholders at applicable rates. REITs are also required to withhold tax at the concessional rate of 5\% on interest payable on external commercial borrowings.

Will REITs be listed on the stock exchanges?

REITs will be listed on the stock exchanges. The tax on Long Term Capital Gains incurred by the investors when they sell the units (REIT units) after 3 years of holding is 10\% if the LTCG are in excess of Rs 1 lakh.

What is the capital gains tax on sale of REITs?

The tax on Long Term Capital Gains incurred by the investors when they sell the units (REIT units) after 3 years of holding is 10\% if the LTCG are in excess of Rs 1 lakh. The Short Term Capital Gains on the sale of units held for less than 3 year will be taxed at 15\%.