Wednesday, November 7, 2018

SEP 18 ECO 13 14 Real Estate Investment Trust Goods and Services Tax Network (GSTN

 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.

No comments:

Post a Comment