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REITs in India: How Real Estate Investment Trusts Work, Tax, Risks and Listed REITs

A plain guide to REITs in India: how SEBI-regulated real estate investment trusts work, the listed REITs as of late 2026, how little you need to invest, how interest, dividend and capital gains are taxed, the risks, and how a REIT compares with buying property.

REITs in India: How Real Estate Investment Trusts Work, Tax, Risks and Listed REITs

A real estate investment trust (REIT) lets you own a small slice of large, rent-earning properties, such as office parks and shopping malls, without buying a building yourself. In India, REITs are regulated by SEBI, their units are listed on the NSE and BSE, and you can buy a single unit through your demat account, often for a few hundred rupees.

Quick answer: an Indian REIT pools investors' money, owns completed commercial properties that earn rent, and must pass on at least 90% of its distributable cash to unitholders, usually every quarter. As of late 2026, six large REITs are listed in India: Embassy Office Parks, Mindspace Business Parks, Brookfield India Real Estate Trust, Nexus Select Trust, Knowledge Realty Trust and Bagmane Prime Office REIT. Payouts are a mix of interest, dividend and other components, each taxed differently, and unit prices move with the market, so returns are not guaranteed.

What is a REIT and how does it work in India?

A REIT is set up as a trust. It raises money from investors through an IPO, uses it to own properties (directly or through companies called SPVs), collects rent from tenants and passes most of that cash to unitholders. It works a bit like a mutual fund, except that it holds buildings instead of shares.

India's REITs are governed by the SEBI (Real Estate Investment Trusts) Regulations, 2014. The key rules for investors are:

  • Income-earning assets. At least 80% of a REIT's assets must be in completed, rent-generating properties, which limits the risk of unfinished projects.

  • Regular payouts. A REIT must distribute at least 90% of its net distributable cash flows to unitholders, at least once every six months. Listed REITs in India generally pay every quarter.

  • Disclosure. REITs publish quarterly results, occupancy and valuation reports, much like listed companies.

  • Independent oversight. Each REIT has a SEBI-registered trustee and an investment manager, and properties are valued by independent valuers.

You can read the regulations and the list of registered REITs on the SEBI website.

India's REIT market has grown quickly since the first listing in 2019. In September 2026, The Realty Today's data put India's listed REIT market value at about $17.7 billion as of March 2026, making it one of the larger REIT markets in Asia.

Also read: Is the 4% Retirement Rule Dead? New Strategies for Gen Z and Millennials

Listed REITs in India (late 2026)

REIT

Listed

What it mainly owns

Embassy Office Parks REIT

2019

Office parks, mainly in Bengaluru, Mumbai, Pune and NCR

Mindspace Business Parks REIT

2020

Office parks in Mumbai, Pune, Hyderabad and Chennai

Brookfield India Real Estate Trust

2021

Office campuses in Mumbai, Gurugram, Noida and Kolkata

Nexus Select Trust

2023

Shopping malls across Indian cities (India's first retail REIT)

Knowledge Realty Trust

2025

Office assets in cities including Mumbai, Bengaluru and Hyderabad

Bagmane Prime Office REIT

2026

Office parks, mainly in Bengaluru

New REITs are being planned, so check the NSE or SEBI list for the latest before you invest. Each REIT's own investor page has its property list, occupancy and distribution history.

What are SM REITs?

Since 2024, SEBI also allows small and medium REITs (SM REITs), which hold smaller assets, often a single building. They are meant for larger investors: the minimum investment is ₹10 lakh. They carry more concentration risk than the big REITs because one tenant or one building can make up most of the income.

How much money do you need to invest in a REIT?

Very little. In 2021 SEBI cut the trading lot for REITs to one unit and set the minimum application in a REIT IPO at ₹10,000–15,000. On the exchange, you can buy just one unit at its market price, which for most listed REITs is a few hundred rupees.

Ways to invest:

  1. Buy units on the NSE or BSE through any broker, just like shares. You need a demat and trading account.

  2. Apply in a REIT IPO through your broker or bank (ASBA/UPI), like a share IPO.

  3. Invest through mutual funds. Some funds, including a few real-estate-focused funds and FoFs, hold REIT units. From 1 January 2026, SEBI treats REIT units as equity-related instruments for mutual funds, which allows more funds to hold them. If you are new to funds, see our guides to what mutual funds are and what an ETF is.

How are REIT payouts taxed in India?

A REIT payout is not one kind of income. Every distribution is split into parts, and each part is taxed differently. The REIT's distribution notice and annual tax statement show the split. As of the 2026-27 tax year, the rules for resident individuals are broadly:

Part of the payout

How it is taxed

Interest

Added to your income and taxed at your slab rate; TDS of 10%

Dividend

Exempt in your hands from tax year 2026-27 (1 April 2026), including where the SPV has opted for the lower company tax regime (see note below)

Rental income

Taxed at your slab rate

Repayment of debt / return of capital

Not taxed until your total receipts of this kind exceed what you paid for the unit; the untaxed part reduces your cost

Selling units (held 12 months or less)

Short-term capital gain, taxed at 20%

Selling units (held more than 12 months)

Long-term capital gain, taxed at 12.5% above ₹1.25 lakh a year (limit shared with shares and equity funds)

Note on dividends: the Taxation and Other Laws (Amendment) Act, 2026 received the President's assent on 17 August 2026. It makes dividends that unitholders receive from business trusts such as REITs and InvITs exempt from 1 April 2026 (tax year 2026-27), including where the SPV has opted for the lower company tax regime; earlier, those dividends were taxable at your slab rate. Interest, rental income and other parts of the payout are still taxed as before. Remember that the new Income-tax Act, 2025 applies from April 2026, so section numbers in older articles may no longer match.

Report each part correctly in your return; our step-by-step guide to filing ITR online can help. If your REIT income is large, speak to a tax adviser.

Risks of investing in REITs

REITs are listed investments, not fixed deposits. The main risks:

  • Market risk. Unit prices rise and fall with the stock market and interest rates. They can stay below the IPO price for long periods.

  • Interest rates. When rates rise, fixed-income options pay more, and REIT prices often fall. Higher rates also raise REITs' borrowing costs.

  • Vacancy and tenant risk. If offices or shops stay empty, or a big tenant leaves, rent falls and so do payouts. Office REITs depend heavily on IT and global companies' leasing.

  • Concentration. Some REITs are focused on one city or one type of property. SM REITs may hold a single building.

  • Payouts can vary. Distributions depend on rent collected and are not fixed.

  • Tax complexity. The mix of interest, dividend and other parts changes from quarter to quarter, which can change your post-tax return.

Also read: What Are Mutual Funds? A Simple Guide to Types, Benefits, Tax and How to Invest

REIT vs buying property: which is better?

Point

REIT

Buying a flat or shop

Money needed

One unit, often a few hundred rupees

Lakhs to crores, plus a loan

Extra costs

Brokerage and small exchange charges

Stamp duty, registration, maintenance, repairs

Selling

A few seconds on the exchange

Weeks or months; may need a discount

Diversification

Many buildings and tenants

Usually one property

Management

Professional managers

You deal with tenants and repairs

Control

None over properties

Full control; you can live in it

Loan leverage

Not available to you directly

Home loan can magnify gains (and losses)

A REIT is a convenient way to earn rent-like income from commercial property with small amounts and easy exit. Buying property suits you if you want a home to live in, full control, or long-term use of the asset. Many people hold both. If you are weighing a home purchase, our guide on renting vs buying a flat in Gurgaon walks through that decision.

How to pick a REIT

  • Occupancy: what share of the space is leased, and is it rising or falling?

  • Tenant mix: how much rent comes from the top 10 tenants?

  • Lease expiries: a lot of leases ending soon can mean vacancies, or a chance to raise rents.

  • Debt: check the loan-to-value ratio in the REIT's investor presentation.

  • Payout history: look at several years of distributions, not just the latest quarter.

  • Price vs NAV: compare the unit price with the net asset value the REIT publishes.

Frequently asked questions

Can I invest in REITs in India?

Yes. India has SEBI-regulated REITs whose units are listed on the NSE and BSE, so you can buy and sell them through a demat and trading account, one unit at a time. Some mutual funds also invest in REITs, which is another way to get exposure.

How are REIT payouts taxed in India?

Each REIT payout is split into parts that are taxed differently: interest and rental income at your slab rate, dividends exempt from tax year 2026-27, and repayment of debt taxed only after you have received more than your cost. Profit from selling units is taxed as capital gains, so check your REIT's tax statement each year.

Are REITs risky?

Yes, REITs carry market risk like any listed investment. Unit prices can fall and payouts can vary because of rising interest rates, empty offices or shops, a slowdown in the property market or reliance on a few large tenants, so returns are not guaranteed the way a fixed deposit's interest is.

What is the difference between investing in a REIT and buying property?

A REIT lets you own a small share of a large portfolio of rent-earning properties, such as offices or malls, without buying, managing or maintaining anything yourself. Its units are far easier to buy and sell than a flat and need much less money, but you have no say in the properties and the unit price moves with the market.

Filed under Finance, Real Estate