"This week SEBI is going to formally announce the guidelines for REITs and InvITs. The regulations are expected any day during this week itself," said UK Sinha, chairman, SEBI, while delivering a keynote address at a pre-Vibrant Gujarat summit event at Gandhinagar on Thursday. These trusts are like mutual funds that raise resources from many investors which will be directly invested in realty or infrastructure projects.
"Going by the experience of Singapore, Australia and Japan, I feel that these two regulations will help us provide long term financing for growth of infrastrcture sector," he said at the event titled, 'Financing For Economic Growth: A policy roadmap'.
Last month the board of the Capital markets watchdog had approved regulations for REITs and will now be notifying the new norms.
"This has been planned with lot of consultants with industry and I am happy that majority of the problem of the industry with regard to pass-through has been addressed," Sinha added. Union Finance Minister Arun Jaitley in his budget speech had announced pass-through status for the purpose of taxation to these two instruments to make them attractive to investors. The pass-through status means that the return from investments through REITs and InvITs will be taxed only in the hands of investors and the trusts will not have to pay tax on income.
"So far as REITs and InvITs are concerned, we are going to begin with a (asset) size of Rs 500 crore. We have deliberately kept the investments at a higher level for investors, because we do not want uninformed investors to come in to this. We are starting with projects that are completed and revenue generating," Sinha added.