Real Estate Investment Trusts (REITs) in India explained: Meaning, types, and tax rules

Curious about how to invest in REITs in India? Learn what they are, how they work, tax implications, and various benefits and challenges

By Forbes India

Published: Aug 18, 2025 03:01:44 PM IST

Updated: Aug 18, 2025 03:07:45 PM IST

India’s real estate sector is one of the massive forces of its economy, expected to contribute almost 13 percent to India’s GDP by 2025. But while the industry continues to expand, funding remains a long-standing challenge, especially for large-scale commercial developments.

With traditional financing often falling short, the market has seen a clear shift in interest toward new, more accessible investment models. One such option gaining traction is the Real Estate Investment Trust (REIT), regulated by the Securities and Exchange Board of India (SEBI).

In this article, we’ll discuss everything about REITs in India - what they are, how they work, types of REITs, tax implications, and more.

What are REITs in India?

Real Estate Investment Trusts (REITs) in India are companies that own and manage valuable properties, mostly commercial spaces like tech parks, malls, warehouses, or data centres. Think of it as a mutual fund, but instead of pooling money into stocks or bonds, REITs collect funds from multiple investors and put that into real estate assets.

REITs allow you to access real estate investments without having to buy or manage properties yourself. Rental income from the properties is collected and distributed as dividends among the unit holders. This makes REIT funds a source of relatively steady cash flows.

As of May 2025, the top REITs in India collectively manage assets worth over ₹1.6 lakh crore and are gaining strong interest from those who want to know how to invest in REITs in India.

List of top REITs in India

Here are some top REITs in India listed on the National Stock Exchange (NSE):

Sr.no.	Top REITs in India	Founded in
1	DLF Ltd	1946
2	Lodha Developers Ltd (formerly known as Macrotech Developers)	1980
3	Prestige Estates Projects Ltd	1986
4	Godrej Properties Ltd	1990
5	Oberoi Realty Ltd	1998
6	Phoenix Mills Ltd	1905
7	Embassy Office Parks REIT	2014
8	Brigade Enterprises Ltd	1986
9	Nexus Select Trust	2022
10	Mindspace Business Parks REIT	2014
11	Anant Raj Ltd	1969
12	Signature Global (India) Ltd	2000

How do Real Estate Investment Trusts work?

REITs collect money from multiple investors and use that pool to buy and manage commercial properties. The rental income collected from these properties becomes the main source of earnings.

As per SEBI rules, REITs in India must distribute at least 90 percent of this income to investors, usually in the form of dividends. When you invest, you don’t own the property - you hold units, similar to mutual fund units. They're listed on the stock exchange, so their value can fluctuate depending on market and economic conditions and how the underlying real estate investments perform.

You, as an investor, can benefit in two ways: regular income from rent and the potential growth in unit value over time. This is why REIT funds are an attractive option if you’re exploring how to invest in REITs in India.

Types of REITs in India

REITs in India are structured in different ways based on how they invest and generate income. Here’s a breakdown of the main types:

Equity REITs: They’re the most common types, which include commercial offices, malls, and warehouses. Most of the earnings come from rent collected from tenants. Many of the top REITs in India today follow this model.
Mortgage REITs (mREITs): Instead of owning property, mortgage REITs finance it. They lend money to real estate owners and developers or invest in mortgage-backed securities.
Hybrid REITs: This model combines features of both equity and mortgage REITs. It allows you to tap into returns from rental income and interest payments, offering a mix of both strategies.
Private REITs: These are not listed on public exchanges and usually raise money from a small group of institutional or accredited investors. SEBI doesn't regulate them, making them less accessible to retail participants.
Publicly-traded REITs: These REITs list their units on stock exchanges like the NSE. They're regulated, offer better liquidity, and are open to individual investors exploring how to invest in REITs in India through the stock market.

Pros and Cons of REITs in India

Like any investment, REITs in India come with both benefits and trade-offs. While they offer a relatively stable way to enter real estate investments, there are some limitations that investors should be aware of.

Here’s a quick comparison:

Pros	Cons
Regular dividend income from rent	Subject to stock market volatility
Liquidity - units can be traded easily on NSE	Limited capital growth compared to stocks
Helps diversify the overall investment portfolio	No tax exemptions on dividends
Easy entry into commercial real estate	High management fees and other additional charges
Transparent structure regulated by SEBI	Limited REITs are available currently

What are the Tax Implications?

Before investing in REIT funds, know how your returns will be taxed. Earnings from real estate investments are taxed as dividends and capital gains.

Any dividend income you receive from REITs will be considered a part of your annual income and is taxed based on your income slab rate. There are no special exemptions on these payouts.

If you sell your units within a year, short-term capital gains (STCG) apply at 15 percent. If held for over a year, long-term capital gains (LTCG) are taxed at 10 percent for profits above ₹1 lakh, without indexation.

For international REIT funds, gains are treated differently. STCG applies if units are held for up to 3 years and taxed as per the slab rate. LTCG (after 3 years) is taxed at 20 percent with indexation.

How to Start Investing in REITs?

Here’s how you can start investing in REITs in India:

Open a demat and trading account: Since REITs are listed on the NSE, you’ll need a demat account to buy or sell units.
Choose the REIT: Look into available options like Embassy Office Parks, Mindspace Business Parks, or Brookfield REIT.
Invest through stock exchanges: Units are traded like regular stocks. You can buy them during market hours.
Explore mutual funds and ETFs: Some mutual fund schemes and international REIT funds offer indirect exposure.
Track your returns: REIT funds generate income through rent and may offer capital appreciation too.

For those looking into real estate investments with lower capital, REITs in India offer an accessible way to participate in commercial real estate.