Need more clarity on REITs' taxation, says HDFC Chairman Deepak Parekh

Terming the Budget announcement on giving pass through status to Real Estate Investment Trusts (REITs) as a good beginning, HDFC Chairman Deepak Parekh has urged the Finance Ministry to come up with more clarification on taxation front for it to be successful.

At his maiden Budget earlier this month, Finance Minister Arun Jaitley had said the REITs have been successfully used to get investment into the sector and added that he intends to provide necessary incentives for REITS which will have pass through for the purpose of taxation.

The industry had initially welcomed the move, which essentially passes the tax liability to the investors, but later demanded some more clarity on the measure.

"Tax pass through status has been granted to REITs, but there are still some taxation issues related to REITs which are still needed to be clarified by the Finance Ministry," Parekh said late last evening.

He was replying to queries from HDFC shareholders about the Budget announcement and if the company, the largest dedicated housing finance player, is looking at forming one.

"REITs is a good beginning but still, there are two levels of taxation. So, some clarification is still needed," Parekh added.

Asia Pacific Real Estate Association (APREA) Chief Executive Peter Verwer had earlier said the proposed approach to taxation rules requires an urgent consideration if the government's announcement is to translate into a successful India REIT model.