“Synopsis”
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have emerged as attractive investment options for NRIs looking to diversify their portfolios in India’s booming real estate and infrastructure sectors. This blog explains how NRIs can invest in these listed trusts, their tax advantages including exemptions from TDS on certain payouts, and the regulatory framework for a smooth investment experience in 2025.
What Are REITs and InvITs?
REITs are companies that own or finance income-generating real estate such as commercial offices, malls, or hotels. They pool money from investors and pay regular dividends from rental income.
InvITs invest in infrastructure projects like roads, power plants, and telecom towers, offering investors regular income from tolls, tariffs, or usage fees.
Both are traded on Indian stock exchanges, making them liquid and accessible investment options for NRIs.
How Can NRIs Invest in REITs and InvITs?
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NRIs can invest through a Demat account linked to a Portfolio Investment Scheme (PIS).
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Investments are made in Indian Rupees through NRE/NRO accounts.
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Buying and selling REIT/InvIT units on stock exchanges is similar to equity trading.
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No specific approvals are required if trading on the exchange under PIS.
Benefits of Investing in REITs and InvITs for NRIs
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Diversification: Gain exposure to commercial real estate and infrastructure without owning physical property.
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Regular Income: Receive quarterly/annual dividends or interest payouts.
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Liquidity: Units are listed on stock exchanges, making them easy to buy or sell.
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Tax Efficiency: Certain payouts from REITs and InvITs are exempt from TDS, helping NRIs save on withholding taxes.
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Lower Investment Threshold: Smaller capital requirements compared to buying physical property.
Tax Implications for NRIs Investing in REITs and InvITs
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Dividend payouts from REITs are exempt from TDS if paid by the trust itself.
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Interest income from InvITs may be subject to TDS but at concessional rates.
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Capital gains tax applies as per Indian tax laws, varying by holding period.
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NRIs can claim tax credit in their country of residence under applicable Double Taxation Avoidance Agreements (DTAAs).
Regulatory Framework and Compliance
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Investments must comply with SEBI guidelines for REITs and InvITs.
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NRIs should ensure their PAN card is updated for seamless tax processing.
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Regular filing of income tax returns in India may be required depending on income and capital gains.
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NRIs should monitor RBI guidelines on foreign investments and repatriation.
Risks to Consider
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Market volatility can affect unit prices.
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Regulatory changes may impact returns.
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Underlying property or infrastructure asset performance influences income.
Conclusion
For NRIs seeking a safe, liquid, and tax-efficient way to invest in Indian real estate and infrastructure, REITs and InvITs offer excellent opportunities. Understanding investment procedures, tax benefits, and compliance will help NRIs maximize returns while diversifying their portfolios effectively in 2025.
