REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) allow investors to access real estate and infrastructure assets at a fraction of traditional costs. According to reports from Mint, investors can start with as little as ₹10,000 to ₹15,000 to gain exposure to commercial real estate and infrastructure projects. Both instruments operate like mutual funds, where sponsors transfer underlying assets into trust structures and issue units to investors, representing their ownership stake in the assets.
As reported by Mint, REITs primarily invest in commercial real estate assets including offices, malls, warehouses, and hotels, while InvITs focus on infrastructure assets such as roads, highways, power grids, and pipelines. Currently, 6 REITs and 28 InvITs are registered with the Securities and Exchange Board of India (Sebi). Notable REIT examples include Knowledge Realty Trust, Embassy Office Parks REIT, and Bagmane Prime Office REIT, while InvIT examples include Powergrid Infrastructure Investment Trust, IRB InvIT FUND, and India Grid Trust.
According to The Economic Times, REITs offer potential returns between fixed deposits and equities, with yields ranging from 6% to 9%. Both REITs and InvITs generate income through rental income, toll collections, or lease rentals, which is distributed to investors after deducting operational and management expenses. Both instruments are required to distribute at least 90% of their taxable income to investors in the form of dividends or distributions on a regular basis, typically every quarter. In the latest fiscal year, five listed REITs distributed over ₹2,566 crore to more than 4.25 lakh unitholders in Q4 FY26, with full-year distributions exceeding ₹8,900 crore, marking a significant milestone for the Indian REIT industry.
As reported by Mint, REITs and InvITs are treated as pass-through entities under the Income Tax Act when investments are routed through a Special Purpose Vehicle (SPV). Since these trusts primarily invest through SPVs rather than directly holding assets, the income earned at the SPV level is generally passed on to investors without being taxed again at the trust level. For investors, dividend income, interest income, and rental income are taxed according to the investor's applicable income tax slab rates. Capital gains taxation applies when investors sell REIT or InvIT units, with listed REITs and InvITs treated as short-term capital gains at 20% for sales within 12 months, and long-term capital gains at 12.5% with an exemption of up to ₹1.25 lakh in a financial year.
According to Mint, REITs and InvITs offer several advantages including low investment requirements, liquidity through stock exchange trading, professional management by fund managers, and diversification across real estate and infrastructure assets. The regulated structure under Sebi provides strict guidelines for formation, disclosures, and operations, while the listed nature enables easy entry and exit options compared to physical real estate investments. Investors benefit from professional management, diversified portfolio exposure, and reduced risk compared to investing in single properties or projects. As reported by The Economic Times, the increased participation from domestic pension funds and insurers, along with simplified foreign investor taxation, can boost capital flows in the sector.
