Real Estate Investment Trust
Why in News?
Blackstone Group along with Embassy Office Parks has filed India’s first and Asia’s largest prospectus for Real
Estate Investment Trust (REIT).
What is a REIT?
• REITs are listed entities which owns, operates and manages buildings/properties (like Office Parks, Malls, Hotels, Residential Buildings etc.) for generating income and is bound by norms defined by SEBI and RERA,
2016.
But REITs functions like a mutual fund and raises money from a number of investors and issues dividends to investors as return.
• RERA regulations regarding REITs
o Projects being developed by REITs should be registered under RERA.
o 70% of the funds raised for a particular project must be deposited in a separate account wherein
70 percent of the money received from the buyers shall be deposited to be used specifically for development of that project only.
• SEBI regulations regarding REITs:
o REITs must distribute at least 90 per cent of their income to investors on a half-yearly basis.
o The minimum investment amount for investors has been set at Rs. 2,00,000.00.
Benefits of REITs
• Bring more investments: REITs will facilitate more
Real Estate (Regulation and Development) (RERA) Act was enacted in 2016. Features of RERA, 2016:
• Intends to regulate transactions between buyers and promoters of residential and commercial real estate developers.
• Creation of Real Estate Regulatory Authority by the States/UTs, consisting of a Chairperson and at least two full time members with experience in urban planning, law and commerce etc, along with mandatory registration of all residential projects with RERA.
• Creation of Real Estate Appellate Tribunals to hear appeals against RERA. REAT to provide time bound judgment in appeals.
• The promoter has to maintain a 'separate account' for every project undertaken. The promoter has to deliver projects in a time bound manner and if promoter fails to give possession of the property then the money received for that property has to be returned to the buyer.
investment in the real estate sector – both domestic and foreign investment by bringing transparency in asset valuation, clarity in carpet area, better corporate governance, clear disclosures and financial transparency practices etc. REITs have been successfully implemented in countries like US, UK, Singapore, Japan, Australia and Canada.
• Increased Transparency: Real estate in India has always received a bad rap when it comes to transparency. In contrast, REITs require a full valuation on a half-yearly and yearly basis.
• Philip to real estate sector: REITs can purposefully step up funding for India’s woefully underfunded urban real estate, including to utilise the scope for city redevelopment, and also provide attractive, stable and long- term returns for retail investors. REITs have the potential of bringing investment for urban development especially in the light of Smart City Mission, AMRUT etc.
• Good option for small investors: REITs are good news for those investors who have a small appetite -- as small as Rs 200,000-- but want to invest in the commercial real estate market. This means that you can add real estate to your investment portfolio without worrying about huge loans.
• Stable returns: A recent report by a leading consultancy suggests that REITs can generate returns of 7-8%
annually with minimum risk.
• Diversification of portfolio: REITs would also enable diversification of the portfolio of the investors and provide the investors a new product that is regular income generating.
• REITs will usher greater liquidity in the commercial sector, while giving developers an option to exit projects, including those developers who are reeling under a financial crunch.
Problems with REITs
• While RERA was enacted in 2016, the first REIT listing is going to happen in 2018 even after several relaxations in regulations by SEBI due to the lack of confidence of investors in real estate sector in India.
• There is a lack of clarity in addressing the current NPA status in real estate sector under RERA and REITs.
• The minimum REIT investment amount has been set at a high value of Rs. 2,00,000.00. This deters the retail investors from investing in REITs.
• As land comes under state list, the legal status of REITs in some states is ambiguous.
• While the government has cleared the decks for the success of REITs, the levy of stamp duty charges at the state level, remains a hindrance in the attractiveness of REITs, as it can reduce the returns and make this form of investment less attractive.
3.14. Goods and Services Tax Network (GSTN)
Why in News?
The Union Cabinet has approved increasing of Government ownership in Goods and Services Tax Network (GSTN).
More
• It has decided that the entire 51% equity held by the Non-Government Institutions in GSTN will be acquired equally by the Centre and the State Governments.
• Hence the restructure GSTN will have 100%
GSTN
• Goods and Services Tax Network (GSTN) is a not for profit company governed under section 8 of the companies Act.
• Currently the centre holds 24.5% equity and the States(including UTs Delhi and Puducherry) hold 24.5% equity in GSTN. The Balance 51% equity is with non- Government financial institutions.
• The Company has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).
government ownership equally distributed between the Centre (50%) and the States (50%).
• There will also be a change in the existing composition of the Board of GSTN. It will have total 11 Directors:
o 1 Chairman
o 1 CEO
o 3 directors from the Centre
o 3 from the States
o 3 other independent directors to be nominated by the Board of Directors
• The decision was taken as the government felt that a vast amount of GST related data should be completely under the its supervision, as it contains sensitive information of over 1 crore taxpayers.
Why in News?
Blackstone Group along with Embassy Office Parks has filed India’s first and Asia’s largest prospectus for Real
Estate Investment Trust (REIT).
What is a REIT?
• REITs are listed entities which owns, operates and manages buildings/properties (like Office Parks, Malls, Hotels, Residential Buildings etc.) for generating income and is bound by norms defined by SEBI and RERA,
2016.
But REITs functions like a mutual fund and raises money from a number of investors and issues dividends to investors as return.
• RERA regulations regarding REITs
o Projects being developed by REITs should be registered under RERA.
o 70% of the funds raised for a particular project must be deposited in a separate account wherein
70 percent of the money received from the buyers shall be deposited to be used specifically for development of that project only.
• SEBI regulations regarding REITs:
o REITs must distribute at least 90 per cent of their income to investors on a half-yearly basis.
o The minimum investment amount for investors has been set at Rs. 2,00,000.00.
Benefits of REITs
• Bring more investments: REITs will facilitate more
Real Estate (Regulation and Development) (RERA) Act was enacted in 2016. Features of RERA, 2016:
• Intends to regulate transactions between buyers and promoters of residential and commercial real estate developers.
• Creation of Real Estate Regulatory Authority by the States/UTs, consisting of a Chairperson and at least two full time members with experience in urban planning, law and commerce etc, along with mandatory registration of all residential projects with RERA.
• Creation of Real Estate Appellate Tribunals to hear appeals against RERA. REAT to provide time bound judgment in appeals.
• The promoter has to maintain a 'separate account' for every project undertaken. The promoter has to deliver projects in a time bound manner and if promoter fails to give possession of the property then the money received for that property has to be returned to the buyer.
investment in the real estate sector – both domestic and foreign investment by bringing transparency in asset valuation, clarity in carpet area, better corporate governance, clear disclosures and financial transparency practices etc. REITs have been successfully implemented in countries like US, UK, Singapore, Japan, Australia and Canada.
• Increased Transparency: Real estate in India has always received a bad rap when it comes to transparency. In contrast, REITs require a full valuation on a half-yearly and yearly basis.
• Philip to real estate sector: REITs can purposefully step up funding for India’s woefully underfunded urban real estate, including to utilise the scope for city redevelopment, and also provide attractive, stable and long- term returns for retail investors. REITs have the potential of bringing investment for urban development especially in the light of Smart City Mission, AMRUT etc.
• Good option for small investors: REITs are good news for those investors who have a small appetite -- as small as Rs 200,000-- but want to invest in the commercial real estate market. This means that you can add real estate to your investment portfolio without worrying about huge loans.
• Stable returns: A recent report by a leading consultancy suggests that REITs can generate returns of 7-8%
annually with minimum risk.
• Diversification of portfolio: REITs would also enable diversification of the portfolio of the investors and provide the investors a new product that is regular income generating.
• REITs will usher greater liquidity in the commercial sector, while giving developers an option to exit projects, including those developers who are reeling under a financial crunch.
Problems with REITs
• While RERA was enacted in 2016, the first REIT listing is going to happen in 2018 even after several relaxations in regulations by SEBI due to the lack of confidence of investors in real estate sector in India.
• There is a lack of clarity in addressing the current NPA status in real estate sector under RERA and REITs.
• The minimum REIT investment amount has been set at a high value of Rs. 2,00,000.00. This deters the retail investors from investing in REITs.
• As land comes under state list, the legal status of REITs in some states is ambiguous.
• While the government has cleared the decks for the success of REITs, the levy of stamp duty charges at the state level, remains a hindrance in the attractiveness of REITs, as it can reduce the returns and make this form of investment less attractive.
3.14. Goods and Services Tax Network (GSTN)
Why in News?
The Union Cabinet has approved increasing of Government ownership in Goods and Services Tax Network (GSTN).
More
• It has decided that the entire 51% equity held by the Non-Government Institutions in GSTN will be acquired equally by the Centre and the State Governments.
• Hence the restructure GSTN will have 100%
GSTN
• Goods and Services Tax Network (GSTN) is a not for profit company governed under section 8 of the companies Act.
• Currently the centre holds 24.5% equity and the States(including UTs Delhi and Puducherry) hold 24.5% equity in GSTN. The Balance 51% equity is with non- Government financial institutions.
• The Company has been set up primarily to provide IT infrastructure and services to the Central and State Governments, tax payers and other stakeholders for implementation of the Goods and Services Tax (GST).
government ownership equally distributed between the Centre (50%) and the States (50%).
• There will also be a change in the existing composition of the Board of GSTN. It will have total 11 Directors:
o 1 Chairman
o 1 CEO
o 3 directors from the Centre
o 3 from the States
o 3 other independent directors to be nominated by the Board of Directors
• The decision was taken as the government felt that a vast amount of GST related data should be completely under the its supervision, as it contains sensitive information of over 1 crore taxpayers.
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