Budget 2014: Incentivising REITs to ease liquidity need for developers, says Neeraj Bansal, KPMG

Union Finance Minister Arun Jaitley announced incentives for REITs and promised to cut pressure on existing bank lending.

A Real Estate Investment Trust ( REIT) is a trust that offers units to the public. Generally speaking, REITs are vehicles which raise funds from investors, acquire rent yielding real estate and distribute the income to investors. REITs typically own & manage income producing properties and are required to distribute most (90%) of the profits earned as dividend to unit-holders.

"Incentivising REITs and granting pass through status for taxation is a welcome and essential step for successful implementation of REIT’s in India," said Neeraj Bansal, Partner and Head, Real Estate and Construction, KPMG in India.

He said that it will help in easing liquidity requirement for developers, paving way to raise easy capital and also provide access to retail investors to benefits from regular income and appreciation benefits from real estate.