In the Union Budget 2024-25, the government carried units of listed business trusts - REITs & InvITs -- at equivalence with listed shares of equity whereas plotting long-term capital gain tax. This significant move will capitalize more responsive investment landscape.
As per the document of Union Budget, the Indian government has cut-down the holding duration for formulating long-term capital additions for business trusts from 36 months-12 months.
The document noted, "Thus units of listed business trust will now be at par with listed equity shares at 12 months instead of earlier 36 months”.
In the Indian market, REITs – Real Estate Investment Trusts and InvITs – Infrastructure Investment trusts are novel concepts.
An official body REIT is made up of a collection of commercial assets in Real estate. By now, most of the assets are leased out and InvITs consist of a range of infrastructure assets such as highways.
The association of Indian REITs that has been created by four listed REITs cheered the decision of reducing the holding duration for shaping long-term capital additions for various units in business.
Manish Satnaliwala, the CEO of National Infrastructure Trust stated that this substantial move signifies the commitment of Indian government against establishing a strong infrastructure structure which is vital for long-term economic progress and advancement.
Regarding this, the association stated, "This change addresses a long-standing industry request and enhances liquidity in Indian REITs, making them more effective investment instruments. Previously, investors were required to hold units of business trusts for 36 months to qualify for the long-term capital gains tax rate. This extended holding period often acted as a barrier to investment flexibility and liquidity, particularly in the real estate sector”.
Further it added, “By shortening the holding period to just 12 months, the Union Budget fosters a more agile investment environment”.
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