REITs and InvITs
Listed trusts that own rent-earning buildings or fee-earning infrastructure and pass on most of the cash
Rules and counts as on 11 October 2026
Verified 12 October 2026
For training and education only. Not investment advice.
Trainer notes
Ask the room: how much money does a person need to own part of a large office park or a toll road? Collect answers. Most will name crores. Come back to this on slide 4. REIT is said 'reet'; InvIT is said 'in-vit'.
A REIT or an InvIT lets many investors share the income of large assets through units traded on an exchange.
The trust owns the buildings or the infrastructure and collects rent or usage charges. SEBI's rules require it to pass on at least 90% of its net cash. Returns are not assured.
Trainer notes
REIT stands for Real Estate Investment Trust. InvIT stands for Infrastructure Investment Trust. Both are trusts registered with SEBI, not companies, so the investor holds units and not shares. The 90% is a share of whatever net cash there is; it is not a fixed amount.
Who does what in the structure
SEBI names the parties; this is the REIT wording. An InvIT adds a project manager; SPV rules differ.
Sponsor
Sets up the trust and is named as sponsor when it applies to SEBI for registration.
Trustee
Holds the trust's assets in trust for the benefit of the unit holders.
Manager
Manages the assets and investments and runs day-to-day operations. An InvIT calls it the investment manager.
SPV
A company or LLP that holds the property. The trust, or its holding company, owns at least 50% of it.
Source: SEBI (Real Estate Investment Trusts) Regulations, 2014, as amended up to 18 April 2026, regulation 2(1).
Trainer notes
SPV means special purpose vehicle. A REIT's SPV must hold at least 80% of its assets directly in properties; an InvIT's, 90% in projects, with the trust holding at least 51%. Neither may invest in other SPVs. Cash moves up the chain: tenant or user pays the SPV, the SPV pays the trust, the trust pays unit holders. An InvIT also has a project manager.
SEBI's main rules, side by side
Three kinds of trust that the public can buy. Figures are from the regulations as they stand today.
| Rule | REIT | InvIT (public issue) | SM REIT scheme |
|---|---|---|---|
| What it must hold | At least 80% of asset value in completed property that earns rent or income | At least 80% in completed infrastructure projects that earn revenue | At least 95% in completed property that earns revenue |
| Smallest application | ₹10,000 to ₹15,000. Trades in lots of one unit | ₹10,000 to ₹15,000. Trades in lots of one unit | ₹10 lakh. Each unit is priced at ₹10 lakh or more |
| Cash to be paid out | At least 90% of net distributable cash flow, at least once in six months | At least 90% of net distributable cash flow, at least once in six months | 100% of net distributable cash flow, at least once a quarter |
| Borrowing limit | 49% of asset value, net of cash | 70% of asset value, net of cash | 49% of scheme assets, if the scheme borrows |
| Smallest asset size | ₹500 crore before a first issue | ₹500 crore before a first issue | ₹50 crore for each scheme |
Source: SEBI REIT Regulations, 2014 (amended up to 18 April 2026) and SEBI InvIT Regulations, 2014 (amended up to 17 April 2026).
Trainer notes
Return to the opening question: a public REIT or InvIT issue can be applied for with ₹10,000 to ₹15,000, and one unit can be bought on the exchange. SM REIT means small and medium REIT. Exceptions: an InvIT may borrow above 49% only with a AAA issuer rating and further conditions; above 25%, both need a credit rating and unit holders' approval. A privately placed InvIT is a different product: minimum investment ₹25 lakh, trading lot ₹25 lakh, payout at least once a year.
From net cash to cash per unit
AN INVENTED TRUST
The trust has 10 crore units.
Net distributable cash flow for the half-year: ₹60 crore.
An investor holds 200 units.
- Least the trust must distribute: 90% of ₹60 crore = ₹54 crore.
- For each unit: ₹54 crore ÷ 10 crore units = ₹5.40.
- For the investor: 200 units × ₹5.40 = ₹1,080 for the half-year.
- The trust states what the ₹1,080 is made of. Assume 50% interest, 30% dividend, 20% repayment of debt: ₹540, ₹324 and ₹216.
Result: The payout follows the cash the assets earn. If net cash falls, 90% of it is a smaller amount.
Illustration with an invented trust and assumed figures. Not a forecast and not a view on any trust.
Trainer notes
Net distributable cash flow is the cash left after the trust and its SPVs meet expenses, interest, tax and other items SEBI lists. The trust may distribute more than 90%. The split into interest, dividend and repayment differs from trust to trust and from one period to the next; the 50/30/20 split is assumed only to set up the next slide.
How each part of the payout is taxed
For a resident unit holder, tax year 2026-27. The trust passes each stream through with its nature intact.
| Part of the payout | Tax in the unit holder's hands | Note |
|---|---|---|
| Interest | Taxable at the unit holder's slab rate. | The trust may deduct tax at source before it pays out. |
| Dividend | Exempt from 1 April 2026, whichever tax regime the SPV has chosen. | The Act drops a condition that denied this where the SPV had chosen the concessional regime. |
| Rent (REIT only) | Taxable at the unit holder's slab rate. | Applies to property the REIT owns directly, not via an SPV. |
| Repayment of SPV debt | Lowers the cost of the units. Taxable as income once the total received exceeds the issue price. | Applies from financial year 2023-24. |
| Sale of listed units | Over 12 months: 12.5% on total such gains above ₹1.25 lakh a year. Else 20%. | Rates apply to sales from 23 July 2024. |
Sources: Income-tax Act, 2025 (s.223, Schedule V); Taxation and Other Laws (Amendment) Act, 2026 (Bill No. 150 of 2026; Gazette 17 Aug 2026).
Trainer notes
In the slide 5 illustration: ₹540 of interest is taxed at slab rate, ₹324 of dividend is exempt, and ₹216 lowers the cost of the units. The rules are in section 223 and Schedule V of the Income-tax Act, 2025. We explain the rule and do not give tax advice; a client should ask a tax professional. Non-residents face different rates.
How mutual funds treat the two
SEBI's circular of 28 November 2025 split the two for mutual funds and specialised investment funds.
REITs: equity-related
From 1 January 2026 a fund's investment in REIT units counts as an equity-related instrument.
InvITs: hybrid
InvIT units continue to be classified as hybrid instruments for fund investments.
Indices: from July 2026
REITs could be included in equity indices only after six months, that is from 1 July 2026.
Source: SEBI circular HO/24/13/12(1)2025-IMD-POD-2/I/157/2025, 28 November 2025.
Trainer notes
REIT holdings that debt schemes held on 31 December 2025 were allowed to stay, and fund houses were encouraged to sell them down over time. The circular also asked AMFI to include REITs in its list that sorts scrips by market capitalisation. A specialised investment fund (SIF) is a SEBI-regulated product offered by fund houses with a higher minimum investment. The reclassification is about how funds count their holdings; it does not change what a REIT is.
Where the market stands
Counts of trusts registered with SEBI, and money raised through unit issues. These are not price data.
- REITS REGISTERED
- 6On SEBI's list as on 11 Oct 2026.
- INVITS REGISTERED
- 27On SEBI's list as on 11 Oct 2026. Public and privately placed together.
- REITS: ₹ CRORE RAISED
- 9,300Through unit issues, April 2025 to March 2026.
- INVITS: ₹ CRORE RAISED
- 21,026Through unit issues, April 2025 to March 2026: ₹21,025.66 crore.
Sources: SEBI, lists of registered REITs and registered InvITs, as on 11 Oct 2026; SEBI statistics, 'Funds raised by REITs and InvITs' (page read 12 Oct 2026).
Trainer notes
Registered does not mean listed: a trust registers first and issues units later. In July 2021 SEBI's board note counted 15 registered InvITs and 3 listed REITs, so both lists have grown. From April to August 2026 the same SEBI page shows ₹6,005 crore raised by REITs and ₹4,839.32 crore by InvITs. Do not quote unit prices or yields of any trust. Refresh these at each month-end, using market figures that are at least 30 days old.
If you learnt this from older material
SEBI notified both sets of regulations on 26 September 2014. Much has changed since.
What older decks say
- Units had to be traded in lots of 100.
- The smallest ticket runs to lakhs of rupees.
- For mutual funds, REIT units are hybrid instruments.
What holds now
- 6 REITs and 27 InvITs are registered with SEBI (11 Oct 2026).
- ₹10,000 to ₹15,000 to apply; one unit to trade, since 30 July 2021.
- REITs count as equity-related for funds from 1 January 2026.
Sources: SEBI PR No. 89/2014 (10 Aug 2014); SEBI REIT and InvIT Regulations as amended; SEBI circular of 28 Nov 2025.
Trainer notes
In August 2014 SEBI's board set the minimum subscription at ₹2 lakh for a REIT and ₹10 lakh for an InvIT. Before the July 2021 amendment it stood at ₹50,000 and ₹1 lakh, with a trading lot of 100 units. Tax has also changed more than once: the holding period and rates for units, the treatment of debt repayment, and in August 2026 the dividend exemption. SM REITs were added to the regulations in 2024.
Four things people get wrong
Misconception'90% payout means a fixed income.'
What is trueIt is 90% of net cash, which moves with rents, occupancy, traffic, tariffs and interest costs. No amount is promised.
Misconception'It is the same as owning a flat.'
What is trueThe holder owns units of a trust, not a property. The unit price is set by buyers and sellers on the exchange and can fall.
Misconception'The payout is taxed one way.'
What is trueInterest, dividend, rent and repayment of debt each follow a separate rule. The trust gives the split with each payout.
Misconception'A REIT and an InvIT are one thing.'
What is trueOne owns real estate, the other infrastructure. Borrowing limits differ, and mutual fund rules class them differently.
Trainer notes
Other points that come up. A unit can trade above or below the trust's net asset value; a REIT declares that value at least once in six months. Many infrastructure assets run on concessions that end on a set date, so part of what an InvIT pays out can be a return of the investor's own money. Units are redeemed only through a buy-back or on delisting, so the way out is to sell on the exchange.
Questions to ask of any trust
What does it own?
Offices, malls, roads, power lines or other assets; how many; and how much of the income rests on a few tenants or users.
How long will income run?
For property: occupancy and when leases end. For infrastructure: how many years of the concession or contract remain.
How much has it borrowed?
Borrowing as a share of asset value, set against SEBI's limit, and when the loans come up for repayment.
What is the payout made of?
The split between interest, dividend, rent and repayment of debt, since each is taxed by a separate rule.
Take-away: The answers are in the trust's offer document and its half-yearly and annual reports.
Trainer notes
These are questions for reading a document, not a checklist for picking a trust. A mutual fund distributor explains what the structure is and where the facts are published; direct REIT and InvIT units are bought through a stock broker and a demat account, not through us. Do not compare the payout of a trust with a deposit rate: one is variable and market-linked, the other is a contracted rate.
Check yourself
Question 1: A trust has 20 crore units and net distributable cash flow of ₹50 crore for the half-year. What is the least it must distribute for each unit?
Answer: 90% of ₹50 crore = ₹45 crore. ₹45 crore ÷ 20 crore units = ₹2.25 for each unit.Question 2: A mutual fund scheme holds units of one REIT and one InvIT. How does SEBI class each holding from 1 January 2026?
Answer: The REIT units count as equity-related instruments. The InvIT units remain hybrid instruments. Source: SEBI circular of 28 November 2025.Question 3: A client says: 'A REIT must pay 90%, so my income from it is fixed.' What would you explain?
Answer: The 90% is a share of the trust's net distributable cash flow, which can rise or fall. The unit price also moves on the exchange. Each part of the payout is taxed by its own rule. Returns are not assured.
Sources and disclaimer
Sources for the figures in this explainer
- Parties, 80% rule, 90% payout, borrowing limits, application size, trading lot, SM REITs: SEBI (Real Estate Investment Trusts) Regulations, 2014, amended up to 18 April 2026.
- InvIT rules, including the 70% borrowing limit and privately placed InvITs: SEBI (Infrastructure Investment Trusts) Regulations, 2014, amended up to 17 April 2026.
- 2014 minimums: SEBI PR No. 89/2014, 10 August 2014. Position before July 2021 and counts then: SEBI board memorandum on minimum allotment and trading lot, July 2021.
- REITs as equity-related instruments, InvITs as hybrid: SEBI circular HO/24/13/12(1)2025-IMD-POD-2/I/157/2025, 28 November 2025.
- Registered REITs (6) and InvITs (27): SEBI lists of recognised intermediaries, as on 11 October 2026. Funds raised: SEBI statistics page on REITs and InvITs.
- Tax: Income-tax Act, 2025 (section 223, Schedule V); Taxation and Other Laws (Amendment) Act, 2026, Bill No. 150 of 2026.
- The trust in the illustration and the quiz, and all its figures, are invented. They do not refer to any real trust.
This material is for training and investor education only. It is not investment, tax or legal advice and is not a recommendation to buy, sell or hold any security or scheme. Examples use assumed figures unless a source and date are shown. Mutual fund investments are subject to market risks; read all scheme related documents carefully. Trustner Asset Services Pvt. Ltd. is an AMFI-registered Mutual Fund Distributor (ARN-286886).