The Treasury Department on Thursday said the Finance Bill had proposed amendments to allow foreign investors (FPIs) to enter into loans for still-used car loans – REIT and InvIT. The move is aimed at increasing funding for infrastructure and the real estate sector. Finance Minister Nirmala Sitharaman announced the move during the 2021 Budget.
In this context, the Government of India as part of the Financial Bill, 2021 has amended the Securities and also the Exchange Board of India Act, 1956 and the subsequent amendments to the Securitization and also the Reconstruction of Financial Assets and Securities Security Act. , 2002 and the Credit Recovery Act through Banks and Financial Institutions Act, 1993 to enable Combined Investment Vehicles (defined as AIF, REIT, InvIT etc.) to borrow and issue securities, “the Treasury said in a statement.
“The necessary notices will be issued by the relevant directors once the Finance Bill has been passed by Parliament,” the statement said.
In order to make those investment vehicles attractive and profitable for investors, the finance minister has also proposed that they refrain from paying taxes on shares in REIT and InvITs. “InVIT and REIT loan financing by foreign investors (FPIs) will be empowered by making appropriate amendments to relevant legislation,” the minister said.
REIT (Real Estate Investment Trustees) and InvITs (Trust Investment Investment) are new investment tools in the Indian market. While REIT contains a portfolio of real commercial assets, much of it has already been released. The invitation forms a portfolio of infrastructure assets such as highways and power transmission equipment.
“The proposed debt for REIT and InvIT’s (through the appropriate amendment) is expected to provide a large fillip and will attract further funding to the sector,” said Chintan Patel, a senior co-founder of construction and housing, KPMG said in India. .
“The steps taken by REITs / InVITS to finance debt and exemptions from tax deductions open the way for foreign participation in such instruments,” said Shravan Sreenivasula, director, economic and product advisory, Avendus Wealth Management.
“To facilitate access to finance and to increase revenue in the infra sector, the proposal to provide FPIs for access to credit for REITs and InvITs will open up a major source of new infrastructure and infrastructure. This will also open up a new way for FPIs to invest in a growing market like India, “said Manoj Purohit, a partner and leader – financial services tax, BDO India said.