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Taxation of Income from REITs in India

  • Writer: tax comply
    tax comply
  • 6 days ago
  • 2 min read

REITs are SEBI-regulated investment instruments that pool capital from investors to own and operate income-generating real estate. Investors earn returns through:


  • Regular distributions (dividends)

  • Long-term capital appreciation

  • Diversified exposure to leased commercial assets


Units are listed on stock exchanges and trade similarly to shares, making REITs accessible to a broad class of investors—from retail and HNIs to institutional and NRI investors.



Type of Income

Tax Treatment

TDS (Tax Deducted at Source)

Dividend Income

 Taxable if SPV opts for Section 115BAA (at investor's slab rate).


 Exempt if SPV does not opt for Section 115BAA.

10% TDS if income exceeds ₹10,000 p.a. 

Interest Income

Taxable at unitholder’s applicable slab rate.

10% TDS if income exceeds ₹10,000 p.a. 

Capital Gains


• Short-Term (STCG)


• Long-Term (LTCG)

• STCG (held < 1 year): Taxed at 20%


• LTCG (held > 1 year): Taxed at 12.5% (if gains exceed ₹1.25 lakh annually); no indexation benefit

No TDS currently prescribed on capital gains

Rental Income

Taxable at the unitholder’s applicable slab rate.

 10% TDS

What is a Special Purpose Vehicle (SPV)?

SPV means any Indian company

(i) in which the REIT holds or proposes to hold not less than 50% of the equity share capital or interest;

(ii) which holds not less than 80% of its assets directly in properties and does not invest in other special purpose vehicles;

(iii) which is not engaged in any activity other than holding and developing property and any other activity incidental to such holding or development.


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