tag:blogger.com,1999:blog-3202774368551476669.post2888945122447436709..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: REITs on the AnvilUmakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3202774368551476669.post-90070670421649515552008-02-01T12:01:00.000+05:302008-02-01T12:01:00.000+05:30The underlying philosophy behind floating this new...The underlying philosophy behind floating this new breed of fund was primarliy to enable retail investors take small positions in a professionally managed portfolio of assets and share the returns – something they could not do directly. However, with so many grey areas and unresolved issues are the investors interest really taken care and protected.<BR/>The Draft REIT regulations are up for comment, by SEBI but there are still certain issues which need clarity.Most prominent among them is that might make valuation of schemes floated by REITs difficult would be availability of independent property valuers.In presenti, the market does not any paraphenalia or bench mark for rating the schemes. It is apparent that such factors such as geographical placement of project, its developers and promoters etc would be deciding factor, but in absence of any regulatory authority, will the anti trust laws and competition issues be impinged. <BR/>Another issue which requires deliberation is taxation issue, world over REITs are required to distribute 90 per cent of their income, which may be taxable in the hands of the investors. Even the SEBI draft guidelines compulsorily require REITs to distribute 90 per cent of its income after tax. However there is no guidance in the draft REIT regulations on the basis of taxation of REITs or its investors. <BR/>Going by the practice and procedures followed by the market, it is most likely that REITS would be taxed at 30 per cent plus surcharge and cess. <BR/>This stands diffferently from taxation of mutual funds, which are specifically exempt under the Income-Tax Act, and taxation where applicable is only at the investor level. <BR/>It is therefore, pertinent that the uncertainty regarding basis of taxation norm for REIT'S be clearly defined. <BR/>Further on, stamp duty is another grey area.The stamp duty implications on tranfer of REITs mightpose a challenge to their growth.Jugnu Baggahttps://www.blogger.com/profile/09710601040400040341noreply@blogger.com