Budget 2014: REITs and infrastructure investment trusts to be incentivised

NEW DELHI: Stating that Real Estate Investment Trusts (REITs) have been successfully in several countries, Finance Minister Arun Jaitley on Thursday said, "Government has proposed incentives for REITs which will have pass through for the purpose of taxation."

In his maiden budget speech, Jaitley said, "REITs have been successfully used as instruments for pooling of investments in several countries." "As an innovation, a modified REITs type structure for infrastructure projects is also being announced as Infrastructure Investment Trusts (InvITs) which would have a similar tax efficient pass through status, for PPP and other infrastructure projects," Jaitley said.

"These structures would reduce the pressure on the banking system while also making available fresh equity," he said. Jaitley exuded confidence that these two instruments would attract long term finance from foreign and domestic sources including the NRIs.

With a special focus on developing urban infrastructure, Finance Minister Arun Jaitley in his budget speech said, "The government has a major focus of providing good infrastructure, including public transport, solid waste disposal, sewerage treatment and drinking water in the urban areas."

"The Budgetary provision for the Pooled Municipal Debt Obligation Facility has been enhanced from Rs 5000 crore to Rs 50,000 crore with extension of the facility by five years to March 31, 2019," he said. Jaitley said that this facility was set up in 2006 with participation of several banks to promote and finance infrastructure projects in Urban Areas on shared risk basis.