Archive · 13 Jun 2025
SEBI Debates Equity Status of REITs and InvITs in India
Imagine you're investing in buildings and infrastructure.
Right now, it's a bit unclear whether these investments, called REITs and InvITs, should be treated like stocks (equity) or something else.
The government already taxes them like stocks.
Some people think they should officially be considered stocks because it could make them more popular and easier to invest in.
But others think they're different because of how they make money and how their value is calculated.
The government is also thinking about letting mutual funds invest more money in these things, which could give investors more choices.
SEBI is considering reclassifying REITs and InvITs as equity, sparking debate.
Tax authorities currently treat REITs/InvITs as equity for tax purposes, with specific capital gains rates.
Supporters argue equity classification could broaden investor access and index inclusion.
Opponents, including AMFI, suggest hybrid status due to cash flow and valuation differences.
SEBI proposes raising mutual fund investment limits in REITs and InvITs.
- Who
- SEBI, mutual funds, investors, and financial institutions are involved in the debate.
- What
- SEBI is considering whether to classify Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as equity.
- When
- The debate is ongoing, initiated by a SEBI consultation paper.
- Where
- India
- Why
- The reclassification could impact investment opportunities, market participation, and tax implications.
Equity Classification Supporters
Hybrid Classification Supporters
Investment Opportunity
Equity Classification Supporters
Equity classification provides a safe investment avenue for mutual funds and retail investors.
Hybrid Classification Supporters
Hybrid classification is more appropriate.
Market Integration
Equity Classification Supporters
Aligns REITs with broader equity market and facilitates inclusion in equity indices.
Hybrid Classification Supporters
Hybrid classification considers the structure of their cash flow, dividend payments, etc.
- Instruments Under Consideration
- REITs and InvITs
- Tax Status
- Currently treated as equity for tax (short-term gains taxed at 20%, long-term at 12.5%)
- Proposed Mutual Fund Investment Limit Increase
- From 10% to 20% of scheme's net value (NAV)
- AMFI and MFAC stance
- Prefer hybrid scheme status
- Largest REIT in India
- Embassy Office Parks
- HSBC view
- REITs are a good investment play for the rate cut cycle