REIT in India — the listed real estate trust, with 90% distribution and 80% income-generating assets
A Real Estate Investment Trust (REIT) in India is a trust registered with SEBI under the Real Estate Investment Trusts Regulations, 2014, that owns and manages income-generating real estate assets, listed on a recognised stock exchange. At least 80% of assets must be in completed, income-generating projects; 90% of net distributable income must be paid to unit holders; and the sponsor must hold 25% for 3 years. This page is the statute-cited version of the structure, the tax, and the compliance.
Short answer
A Real Estate Investment Trust in India is governed by the SEBI (Real Estate Investment Trusts) Regulations, 2014, as amended. It is a pooled vehicle that owns, operates, or finances income-generating real estate, listed on a recognised stock exchange with minimum 80% of assets in completed and income-generating projects. Sponsor must hold 25% for 3 years, trust income is taxed at 10% for distributed income, and minimum issue size is ₹250 crore. This is a regulated, listed, publicly-offered structure — not a private real estate fund.
The four things that matter
Where this structure actually goes wrong.
Regulation 3 — what qualifies as a REIT
Under Regulation 3 of the SEBI (REIT) Regulations, 2014, a REIT is a trust established under the Indian Trusts Act 1882, registered with SEBI, and listed on a recognised stock exchange. The trust must have a trustee (a SEBI-registered debenture trustee), a sponsor (who contributes the initial assets), and a real estate investment manager (REIM) who is SEBI-registered. The REIT can only invest in income-generating real estate — not under-construction projects (unless held as不超过 10% of the value).
Regulation 3 · SEBI-registered trust · listed on exchange · income-generating RE only
80% income-generating rule — the core constraint
At least 80% of the REIT's assets must be completed and income-generating (Regulation 18(1)(a)). Up to 10% may be in under-construction projects, and the remainder in listed or unlisted debt, government securities, and money-market instruments. This is the investor protection rule: you cannot pack a REIT with speculative land banks and call it income. The minimum asset value at the time of initial offer is ₹500 crore.
80% income-generating assets · 10% under-construction max · ₹500 crore minimum asset value
90% distribution mandate — the investor's return
At least 90% of the REIT's net distributable income must be distributed to unit holders (Regulation 18(1)(b)). This is not optional — failure to distribute triggers a specific compliance escalation and potential SEBI action. The distribution is made at least semi-annually. Distributions keep their character in the hands of the unit holder under s.115UA of the Income-tax Act 1961: interest and rent components are taxable at the rate applicable to the holder (TDS under s.194LBA), dividend components are exempt unless the SPV has opted for s.115BAA, and since the Finance Act 2023 debt-repayment distributions are taxable under s.56(2)(xii). The REIT itself is exempt on interest and dividends from its SPVs (s.10(23FC)) and on rent from directly held property (s.10(23FCA)).
90% minimum distribution · semi-annual · pass-through under s.115UA
Sponsor lock-in and listing requirements
The sponsor must hold at least 25% of the REIT for the first 3 years after listing (Regulation 18(1)(c)). This aligns sponsor and investor interests. The minimum issue size for a public offer is ₹250 crore (Regulation 12), and at least 200 unit holders are required (excluding the sponsor and its associates). The REIT must be listed on a recognised stock exchange with regular SEBI-compliant disclosures.
25% sponsor lock-in 3 years · ₹250 crore minimum offer · 200 unit holders · listed on exchange
Brutally honest
Where it wins. Where it hurts.
- ✓Listed, regulated structure with SEBI oversight — retail investors can participate
- ✓90% distribution mandate means regular income for unit holders
- ✓Pass-through taxation under s.115UA — each income component is taxed once, in the unit holder's hands
- ✓80% income-generating rule limits speculative risk
- ✓Liquidity through exchange listing — unlike private real estate
- ✗Minimum ₹500 crore asset value and ₹250 crore offer size — only large sponsors
- ✗SEBI registration, trustee, REIM, and quarterly disclosure — heavy compliance
- ✗Cannot invest more than 10% in under-construction projects — limits growth plays
- ✗Sponsor must hold 25% for 3 years — significant capital lock-up
- ✗Distributions are mandatory even in down years — can strain cash reserves
Large real estate developers or sponsors with ₹500 crore+ of completed, income-generating assets who want to list and monetise. If you are a small developer, the InvIT or a private real estate fund is more realistic. If you are an investor, REITs are the listed way to get real-estate exposure without buying property.
Small developers, under-construction project portfolios, or anyone who thinks a REIT is a tax shelter for personal property — it is a regulated, listed, public-investment vehicle with real obligations.
At a glance
The decision table.
| Formation cost | SEBI REIT registration, trust deed, IPO/listing fees, legal and valuation costs; total structuring ₹2–5 crore for a real REITSEBI (REIT) Regulations 2014, Regulation 3 |
|---|---|
| Annual compliance | Quarterly results, valuation reports (semi-annual by registered valuers), annual trustee report, SEBI filings, and listing obligationsRegulation 18–23 SEBI (REIT) Regulations 2014 |
| Personal liability | Trust structure — unit holders' liability limited to unpaid amounts on their unitsIndian Trusts Act 1882; SEBI (REIT) Regulations 2014 |
| Investor-ready | Yes — this IS the investment vehicle; listed on exchanges, publicly offered to all investors including retailSEBI (REIT) Regulations 2014 |
| Conversion path | No conversion; delisting requires SEBI approval and unit holder approval (Special Resolution)Regulation 33 SEBI (REIT) Regulations 2014 |
What we actually do
Five tracks, start to finish.
- 01REIT structuring & SEBI applicationOne-time (6–12 months)
Trust deed, REIM set-up, trustee appointment, asset valuation, and SEBI registration application.
- 02Initial public offer & listingOne-time
Draft offer document, SEBI review, public offer (minimum ₹250 crore), and listing on a recognised exchange.
- 03Ongoing compliance & distributionQuarterly
90% distribution mandate, quarterly results, semi-annual valuations, SEBI filings, and trustee oversight.
- 04Asset acquisition & growthAs needed
New asset acquisitions (must remain 80% income-generating), rights issues, and compliance with leverage limits.
- 05Sponsor exit & wind-downAfter 3 years
After 3-year lock-in, sponsor can sell units; delisting requires SEBI and unit-holder approval.
Common questions
Statute-cited answers.
What is a REIT in India?+
A Real Estate Investment Trust is a trust registered with SEBI under the REIT Regulations, 2014, that owns and manages income-generating real estate assets. It is listed on a recognised stock exchange, must distribute at least 90% of net distributable income to unit holders, and at least 80% of its assets must be in completed, income-generating projects. It is the SEBI-regulated, listed way to invest in real estate without buying property directly.
What percentage of a REIT's assets must be income-generating?+
At least 80% of the REIT's total assets must be invested in completed and income-generating real estate projects (Regulation 18(1)(a) of the SEBI REIT Regulations, 2014). Up to 10% may be in under-construction projects, and the remaining balance in listed/unlisted debt, government securities, and money-market instruments. The minimum asset value at the time of the initial offer is ₹500 crore.
How is REIT income taxed in India?+
Distributions keep their character in the hands of the unit holder under s.115UA of the Income-tax Act 1961: interest and rent components are taxable at the rate applicable to the holder (TDS under s.194LBA), dividend components are exempt unless the SPV has opted for s.115BAA, and since the Finance Act 2023 debt-repayment distributions are taxable under s.56(2)(xii). The REIT itself is exempt on interest and dividends from its SPVs (s.10(23FC)) and on rent from directly held property (s.10(23FCA)). Capital gains on the sale of listed REIT units follow the standard short-term and long-term capital gains rates. Category III REITs (if any) are taxed at the fund level. The pass-through nature means the REIT itself does not pay corporate tax on the distributed income.
Can retail investors invest in a REIT?+
Yes. REITs are listed on recognised stock exchanges and available to all investors, including retail. The minimum investment is the price of one unit on the exchange (typically ₹300–₹400 per unit). The minimum public offer size is ₹250 crore, and the REIT must have at least 200 unit holders (excluding the sponsor and associates).
How long must a sponsor hold REIT units after listing?+
The sponsor must hold at least 25% of the total units of the REIT for a minimum period of 3 years from the date of listing (Regulation 18(1)(c) of the SEBI REIT Regulations, 2014). This lock-in is designed to align the sponsor's interests with those of public unit holders. After 3 years, the sponsor may sell units on the exchange subject to SEBI disclosure requirements.
Listing real estate through a REIT? The structure, compliance, and 90% distribution need to be right.
We structure REITs for large sponsors, handle SEBI registration and the public offer process, and set up the ongoing distribution and compliance framework.
Listed? The quarterly disclosure and distribution calendar is active.
Quarterly results, semi-annual valuations, 90% distribution mandate, and SEBI filings — the obligations that keep the REIT listed and compliant.
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