REITs, InvITs & Fractional Ownership

Say the words "invest in real estate" out loud and watch what your mind does. It reaches for a flat — and then for everything that comes with a flat. ₹50,00,000 (₹50 lakh — that's fifty times one lakh, and a lakh is one hundred thousand rupees) you'd have to find or borrow. A down payment that empties your savings. A tenant, and the WhatsApp messages about a leaking tap. Property tax, society dues, the broker, the paperwork. And on the day you finally want your money back, a four-to-six-month wait to find a buyer and register a deed. For most people that whole picture is the reason the sentence ends right there: *I'd love to, but I can't — not the money, not the hassle.*

Here is the fact this lesson is built on: you can own income-producing real estate without any of that. Not a scheme, not a loophole — a SEBI-regulated, stock-exchange-listed product called a REIT, which owns real buildings full of paying tenants and lets you buy a sliver of the whole portfolio for a few hundred rupees. No sale deed. No stamp duty. No tenant of your own. You buy units the way you'd buy any share — in a demat account — and you can sell them in the time it takes to read this sentence. The rent those buildings collect comes to you as a regular payout. It is the closest thing there is to being a landlord without being a landlord, and by the end of this lesson you'll understand it well enough to decide whether it belongs in your money at all.

Two people carry the lesson, because a REIT answers two very different questions. Aarti Deshpande — 24, renting a 1BHK in Pune on an ₹11,00,000-a-year salary — has never bought property and isn't ready to. She has a modest ₹1,00,000 (₹1 lakh) she'd like to put to work, and she wants a foot in the real-estate door without the flat. Hers is the *can I even afford this, and can I get my money back* question. Suresh Menon — 55, Kochi, earning ₹40,00,000 a year in the top tax slab, already a landlord with a let-out flat netting about 3% (you met his flat in Lessons 30 and 31) — has fresh capital and a sharper question: *another flat, or a REIT?* One of them is deciding whether to start; the other is deciding where to put lakhs. The same instrument serves both.

Start with the letters, because the jargon is doing the scaring. REIT stands for Real Estate Investment Trust, and each word earns its place. It is a trust — a legal pot, run by a professional manager, that exists to hold assets on behalf of many investors. The assets are real estate — real, physical, income-producing buildings, in India almost always commercial: office parks leased to IT companies, business parks, and shopping malls. And it's an investment vehicle in the truest sense: the trust is sliced into equal units, those units are listed on the stock exchanges (the NSE and BSE), and anyone with a demat account can buy and sell them like shares.

The single most important idea in this lesson is the difference between a unit and a sale deed. When you buy a flat, you get a registered sale deed — a document at the sub-registrar's office that says *this specific flat is yours* (the whole machinery of Lessons 8 and 25). When you buy a REIT unit, you get no deed to anything you can point at. You don't own flat 4B or the third floor. You own an equal fraction of a *trust* that owns dozens of buildings — so your "property" is a number in your demat account, not a key in your hand. That sounds like less, and in the this-is-mine sense it is. But it's also what makes the whole thing liquid, tiny-ticket and hands-off: there's no deed to register, no tenant to chase, and nothing to physically sell. You've traded the deed for a unit, and the unit is the whole point.

India's REIT market is young but real. As of mid-2026 there are six REITs listed — Embassy Office Parks (the first, listed 2019), Mindspace Business Parks, Brookfield India, Nexus Select Trust (which owns malls rather than offices), Knowledge Realty Trust (listed 2025, now the largest by portfolio), and Bagmane Prime Office (listed in May 2026). Between them they hold well over ₹3,00,000 crore (₹3 lakh crore — a lakh crore is one followed by twelve zeroes) of property leased to hundreds of tenants, and pay out to roughly 4.6 lakh unitholders. Those last figures are market data and drift — treat them as directional, a picture of the mid-2026 landscape rather than fixed numbers.

Why does this structure exist at all? Because commercial real estate — a whole office tower leased to Infosys — is the best-yielding property there is (Lesson 3 put commercial yields at 7–10% against residential's 2–4%), but it costs hundreds of crores that no ordinary person has. The REIT is the machine that breaks a ₹5,000-crore office portfolio into ₹100 pieces so that Aarti, with ₹1,00,000, can own the same rent stream as an insurance company. That democratising split — many small investors, one professionally-run pile of blue-chip property — is the entire reason a REIT is worth learning.

Now the number that makes people sit up. A flat's ticket is lakhs. A REIT unit's ticket is the price of one unit — because in July 2021 SEBI cut the trading lot to a single unit. There is no minimum of a hundred units, no ₹50,000 floor. In mid-2026 one unit of an Indian REIT trades for roughly ₹100 to ₹490 depending on the REIT (Bagmane near ₹104, Nexus around ₹164, Embassy around ₹443 — directional, and moving every day the market is open). That's it. That's the entry price. You could own a piece of a Bengaluru office park for less than a cinema ticket.

Put Aarti's ₹1,00,000 through it. At a directional ₹400 a unit (a round figure for the illustration — real prices ranged from about ₹100 to ₹490 across the six REITs in mid-2026), ₹1,00,000 buys 250 units. Those 250 units make her a part-owner of every building in that REIT's portfolio, entitled to her slice of all the rent. And here is the part a flat can never match: if she needs the money next Tuesday, she opens her app, sells the 250 units at the going price, and the cash settles in a day or two. No buyer to find. No deed to register. No four-month wait. That property is what the term listed liquidity means — because the units are listed on an exchange, they're as sellable as any share, in minutes, at a transparent price.

Liquidity cuts both ways, and honesty demands the flip side. Because the price is set by the market every second, it also *moves* every second — the value of Aarti's 250 units will be a little higher some months and a little lower others, the way any listed price wobbles, while a flat's "value" sits invisible and unquoted between the rare moments you actually get it valued. A REIT won't let you pretend the price isn't moving. That visible wobble unsettles some first-time investors — but it's the same asset either way; the REIT is just honest about the number in real time.

A share in an ordinary company can decide to pay you nothing — reinvest all the profit, hand out no dividend, and leave you hoping the price goes up. A REIT is not allowed to do that, and that single rule is what turns it into an *income* investment. By SEBI's regulations, a REIT must distribute at least 90% of its net distributable cash flow to unitholders, at least twice a year. The rent comes in, the running costs and loan interest go out, and at least 90% of what's genuinely left over is legally required to land in your account — it cannot be hoarded.

What does that turn into as a yield? In mid-2026 the listed REITs were distributing roughly 5% to 6% of their unit price a year — a figure that has drifted down from the 6–7% of a few years ago mainly because unit *prices* rose (a bigger denominator on similar rent). That's a directional number, not a promise: it moves with rents, occupancy and the unit price, and it is emphatically *not* guaranteed — the word "guaranteed" next to a REIT is a warning sign we'll come back to. But ~5–6% that you can actually collect, from property, without a tenant, is the headline. Hold that number next to Lesson 3's reminder that a residential flat in an Indian metro nets only 2–4% after its costs, and you can already feel where this lesson is heading.

For Aarti's ₹1,00,000, a round 6% distribution (we'll use 6% as a clean illustration; mid-2026 actuals ran a touch lower and move daily) is ₹6,000 a year — about ₹500 a month — arriving in her bank account without her lifting a finger, for a ₹1,00,000 stake she can sell any morning. It is not a fortune. But it is a real, hands-off, sell-anytime income from real estate on a renter's budget, and that combination simply does not exist in a physical flat.

This is where a REIT stops being simple, so we'll take it slowly — because the tax on the payout is genuinely different from the tax on rent, and getting it wrong is how people mis-judge the whole product. A flat's rent is one bucket: it's taxed as house-property income, at your slab, after a flat 30% standard deduction (Lesson 30). A REIT's payout arrives as three buckets, and each is taxed on its own rules. The REIT tells you the split on its distribution statement; the law that governs it is Section 115UA of the Income-Tax Act, which simply passes each type of income through to you with its character intact.

Bucket one is interest — usually the biggest slice, because a REIT lends money down to the companies that hold its buildings and that interest flows back up to you. Interest is taxed at your income-tax slab, and the REIT deducts 10% TDS (tax deducted at source, Section 194LBA) before it reaches you, which you adjust against your final bill. Bucket two is dividend — this one is conditional, and it trips people up: it's taxed at your slab if the building-owning company opted for the 22% concessional corporate-tax rate, but it's tax-free in your hands if that company didn't — so whether your dividend slice is taxed literally depends on a corporate-tax choice made inside the REIT, which its statement will tell you. Bucket three is return of capital (also called the amortisation slice): this is not taxed the year you receive it at all. Instead it quietly reduces your cost of acquisition — the price the taxman treats you as having paid — so it resurfaces later as a larger capital gain when you sell (Sections 48 and 56(2)(xii)).

Numbers make this concrete, so put it on Suresh, who's in the top slab (30% plus 4% cess = an effective 31.2% marginal rate). Suppose his REIT stake pays ₹3,00,000 in a year, split in a directional ~60/15/25 the way an Indian REIT's payout often lands: interest ₹1,80,000, dividend ₹45,000, return-of-capital ₹75,000. The taxable slices are the interest and dividend — ₹2,25,000 together — and at 31.2% that's ₹70,200 of tax, leaving him ₹2,29,800 in hand this year. The ₹75,000 of return-of-capital escapes tax now; it trims his cost base (from, say, ₹50,00,000 to ₹49,25,000), so he'll meet it again as capital gains the day he sells. The card below lays the three buckets out.

One more piece completes the tax picture: what happens when you sell the units. That's a capital gain, taxed like any listed security — if you held for more than 12 months it's long-term, taxed at 12.5% on gains above ₹1.25 lakh a year (Section 112A); 12 months or less is short-term at 20% (Section 111A). Notice that's a friendlier long-term rate and a shorter one-year clock than a physical flat's (a flat needs 24 months to go long-term). We won't compute a full gain here — the machinery of cost base, holding period and exemptions is exactly what Lesson 35 · Selling Your Property — Capital Gains is for, and it applies to REIT units too. The point for now is only that the *payout* and the *sale* are taxed on different tracks, and the return-of-capital bucket is the thread that ties them together.

This is the comparison Suresh actually cares about, and it's the heart of the lesson. He has roughly ₹50,00,000 (₹50 lakh) of fresh capital. The reflex — his, and almost everyone's — is to buy a second let-out flat, because that's what property *is* to a certain generation. Lesson 3 already warned him about the trap in it: an Indian residential flat, after maintenance, vacancy, property tax and the rest, nets only about 2–4%, and once a loan is involved the rent often doesn't even cover the EMI — the "negative carry" that quietly bleeds money every month. Let's put the flat and a REIT side by side on the same ₹50,00,000, after tax, and see it in rupees.

The flat. At a ~4% gross rent that's ₹2,00,000 a year; after roughly 1% of value going to upkeep, vacancy and property tax, the net operating income is about ₹1,50,000 (a ~3% net yield). Then income tax: as house-property income it's taxed on ₹2,00,000 less the 30% standard deduction = ₹1,40,000, and at Suresh's 31.2% that's ₹43,680 of tax. Net-net, the flat leaves him about ₹1,06,320 a year — an effective 2.13% — and that's *before* we count that it's illiquid and costs 7–10% of its value to get in and out of (stamp duty, brokerage, capital-gains). The REIT. The same ₹50,00,000 at a 6% distribution is ₹3,00,000 a year; after the ₹70,200 of tax we computed above, that's ₹2,29,800 in hand — an effective 4.60% — sellable in minutes for a fraction of a percent in brokerage.

On the same ₹50,00,000, the REIT pays Suresh ₹2,29,800 a year against the flat's ₹1,06,320 — about ₹1,23,480 more, every year — and it does so while staying sellable in minutes, needing no tenant, and spreading his money across dozens of buildings instead of betting it all on one door in one city. If the decision were only about income and liquidity, it wouldn't be close.

A big listed REIT owns *dozens* of buildings and you own a tiny bit of all of them. But what if you want a slice of one specific building — that shiny new office block on the ORR whose tenant you can name — rather than a diversified basket? That's what fractional ownership promised, and for years it was sold by platforms operating in a regulatory grey zone: you'd put in ₹10–25 lakh, the platform would pool investors into a special-purpose company (an SPV or LLP) that bought the building, and you'd own a paper fraction of it. The rent was real; the *protection* was not. Disclosure was thin, exits were hard, and no regulator stood behind it if the platform mismanaged your money.

In March 2024, SEBI closed that grey zone by creating a regulated home for exactly this: the SM REIT — Small and Medium REIT. It's a REIT built for smaller, more focused pools of property, with rules that read like guard-rails: each scheme holds ₹50 to 500 crore of assets; the minimum investment is ₹10,00,000 (₹10 lakh); there must be at least 200 investors (so it's a genuine pool, not a private club); and it must distribute 100% of its NDCF, at least every quarter — an even stricter payout than a big REIT's 90%. Crucially, SEBI now requires genuine fractional-property platforms to come under this SM REIT framework — so the regulated way to own a slice of one building today *is* an SM REIT. The first was Property Share's "Platina" (a Bengaluru office asset, 2024), followed by a second scheme, "Titania" (2025), with a handful more emerging (directional — the list is still short and growing).

So there's a ladder here, from the smallest ticket to the biggest, and it's worth seeing whole. At the bottom, a listed REIT — a few hundred rupees a unit, dozens of buildings, most liquid. Beside it, an InvIT (next section) — the infrastructure version. Above them, an SM REIT — ₹10 lakh, one building or a small pool, regulated since 2024. And the old fractional platforms — whose legitimate future *is* the SM REIT. The pattern to notice: the smaller the ticket, the more buildings you're spread across and the faster you can sell; the bigger the ticket, the more you own of one specific building — and the less liquid it gets.

For most people reading this, the honest guidance is that the bottom of the ladder is the sensible start. A listed REIT gives you diversification, daily liquidity and a regulator, for a few hundred rupees. An SM REIT is a real, now-regulated product — but ₹10 lakh into a single building is a concentrated bet that suits an investor who's done the homework, not a first foot in the door. And any "fractional" platform that *isn't* registered as an SM REIT is the old grey-zone model wearing a new coat — which brings us to the two cousins and then to the traps.

A REIT owns buildings. An InvIT — Infrastructure Investment Trust — owns infrastructure: the same units-and-mandatory-distribution machinery, pointed not at office parks but at power transmission lines, highways, gas pipelines, telecom towers and renewable plants. The rent-equivalent here is the toll on a road, the tariff on a power line, the fee on a pipeline — long, contracted, often government-linked cash flows. Listed InvITs trade on the exchange exactly like REITs, in a single-unit lot, held in your demat account, and are bound by the same ≥90% of NDCF distribution rule.

The number that draws people to InvITs is the yield: roughly 6% to 11% in mid-2026 — generally higher than a REIT's — with the toll-road InvITs at the top and the government-backed power ones nearer the bottom. That's a directional range and it moves with unit prices; and the higher yield is not a free lunch. A toll road's income depends on traffic that can disappoint, and an asset like a road has a finite concession life — it's handed back to the government after some decades, so part of that fat yield is really your own capital being returned to you over the asset's life, not pure profit. InvITs reward a little more homework than REITs. If the infrastructure and commercial angles interest you as *direct* investments rather than as trusts, that's the territory of Lesson 47 · Commercial & Alternative Real Estate; here they're simply the fourth rung on the ladder of owning income-producing assets in units.

Everything appealing about this lesson — real estate, small ticket, a nice regular payout — is exactly the raw material a scam is built from. The tells are consistent, and once you know how the real, SEBI-registered thing behaves, every fake becomes visible. The single most important sentence in this whole lesson is this: a regulated REIT, SM REIT or InvIT is SEBI-registered, bought through your own demat account on an exchange, and never promises a fixed return. Its payout rises and falls with rents and occupancy — so any "assured", "guaranteed" or "fixed 12%" stapled to real estate is telling you it is *not* one of these regulated products.

Walk the four tells. The "assured 12%" tell is the loudest: a registered product legally cannot and will not promise a yield, so the promise itself is the confession. The unregulated "fractional" platform is subtler — it may be a real building and real rent, but if it isn't registered as an SM REIT, it's the pre-2024 grey-zone model with no regulator behind your money; ask for the SM REIT registration and walk if there isn't one. The "pre-IPO REIT" tip and its cousins — illiquid "property tokens," paid Telegram groups pumping a "REIT allotment" — fail on mechanics: a real REIT is bought on the exchange through *your* demat account, never by paying a person or a group. And assured-return "property bonds" are the classic shape of a Ponzi, paying early investors with later investors' money until the new money slows and the payments — and the "asset" — vanish.

Maybe you're reading this a beat too late — you already put ₹8 lakh into a "12% assured" fractional platform a cousin swore by, and now the payouts have stopped and the WhatsApp group has gone quiet. First, set the blame down. These schemes are engineered by professionals to look exactly like the regulated products in this lesson; the whole point of the "assured" language and the polished brochure is to disarm a careful person. Being deceived by a deliberate, well-funded deception is not the same as being careless, and the shame that keeps people silent is precisely what lets the operator move on to the next family.

Now, what you can still do — because it's more than nothing. Gather every record while it exists: the payment trail, the account you paid into, the brochure, the messages, the names. Check whether it was ever registered — search SEBI's site and the exchange; the answer tells you which door to knock on. File on SEBI SCORES if there's any registered entity involved, and report to the cyber-crime portal (cybercrime.gov.in / 1930) for the online-fraud angle — fast, because money is easier to trace and freeze in the first hours and days than later. Find the other investors — a scheme with 200 victims is a stronger, more visible case than one lonely complaint, and organised groups get regulators' attention. You may not recover every rupee, and honesty requires saying so. But you convert a private loss into a reported one — and next time, you'll invest only in something you can look up on SEBI's own website first.

If a regulated REIT, SM REIT or InvIT investment goes wrong — a distribution that never arrives, a broker error, a platform that won't process a sale — there's a ladder, and climbing it in order saves both money and weeks. Here is the honest version, including the free rungs and the caveats nobody prints in the brochure.

1. Your broker or the REIT's registrar first (free). Most problems — units not showing in demat, a distribution not credited, a botched trade — are operational, and the fastest fix is your broker/depository participant or the REIT's registrar and transfer agent (RTA), whose contact is on every distribution notice. Put it in writing (email), keep the ticket number. Give it a couple of weeks before escalating.
2. SEBI SCORES (free). If the broker or RTA doesn't resolve it, lodge a formal grievance on scores.sebi.gov.in against the registered entity. It gives you a tracking number and a defined response timeline, and it puts a regulator's weight behind your complaint — the single most useful free rung for anything SEBI-registered.
3. The stock exchange's investor grievance cell (free). For trade- and listing-related disputes, the NSE and BSE run their own grievance and, where eligible, arbitration mechanisms — a parallel channel especially for problems that are really the broker's or the exchange's doing.
4. A SEBI-registered investment adviser or a CA — the paid rung, priced to the stakes. For a decision (does this SM REIT suit me?) or a tax question (how do I report the three buckets on my return?), paid help earns its fee once real money is involved; for a ₹500 distribution glitch, it's overkill.
5. Consumer forum or cyber-crime / EOW for fraud — the escalation. If the loss is from a fraud rather than a regulated hiccup — an unregulated 'fractional' platform, an assured-return scheme — the roads are the National Cyber Crime portal (cybercrime.gov.in / 1930), the Economic Offences Wing for larger amounts, and the consumer forum for a deficiency-of-service claim. Be realistic: these routes work, but they run on months-to-years timelines, so speed at the reporting stage and organised numbers matter more than any single filing.

• "What exactly is a REIT — do I own a flat?" No — and that's the key. You own units in a trust that owns many income-producing (mostly commercial) buildings. There's no sale deed to any specific flat; your holding is a number in your demat account, entitling you to a slice of the whole portfolio's rent. You've traded the deed for a unit — which is what makes it tiny-ticket, liquid and hands-off.
• "How much money do I need to start?" One unit — roughly ₹100 to ₹490 in mid-2026 (directional, moves daily). SEBI cut the trading lot to a single unit in 2021, so there's no five-figure minimum on the exchange. The old '₹10,000–₹15,000' figure was only ever the minimum in a fresh IPO, not everyday buying.
• "How is a REIT's payout taxed — is it just like rent?" No. Rent is one bucket (slab, after 30% standard deduction). A REIT payout is three: interest (slab, 10% TDS), dividend (usually slab, sometimes tax-free depending on the building company's tax choice), and return-of-capital (not taxed now — it trims your cost base and returns as capital gains on sale). The REIT's statement shows the split.
• "Is the yield guaranteed?" Never — and anyone who says it is has just failed the scam test. A REIT must distribute at least 90% of its net cash flow, but the amount rises and falls with rents and occupancy. Mid-2026 yields ran ~5–6% (directional). 'Assured' or 'guaranteed' next to real estate is a warning light, not a feature.
• "A REIT or a second flat — which is better?" On income and liquidity, the REIT usually wins: on the same ₹50,00,000, a REIT nets a top-slab investor about ₹2,29,800 a year versus a flat's ₹1,06,320, and sells in minutes versus months. But a flat can be lived in, leveraged and may appreciate faster. If income, liquidity, ticket and diversification are your problems, a REIT solves them; if control and leverage matter more, a flat still has a case.
• "What's an SM REIT, and is fractional ownership safe now?" An SM REIT is SEBI's regulated home (since March 2024) for owning a slice of one building — ₹10 lakh minimum, ₹50–500 crore of assets, 200+ investors, 100% of cash flow paid at least quarterly. Genuine fractional platforms must now register as SM REITs. If a 'fractional' offer isn't a registered SM REIT, it's the old unregulated model — treat it with suspicion.
• "How is an InvIT different from a REIT?" Same machinery, different assets: an InvIT owns infrastructure (power lines, highways, pipelines, towers) rather than buildings. Yields tend to be higher (~6–11%, directional), but part of a road InvIT's fat yield is really your capital coming back as the asset's concession runs down, and traffic-linked income carries more risk. Taxed on the same three-bucket basis as a REIT.
• "Do I need a demat account, and can NRIs invest?" Yes, you need a demat account (the same one you'd use for shares) to hold listed REIT/InvIT units. NRIs can generally invest in listed REITs and InvITs subject to FEMA rules — the NRI-specific angles are in Lesson 38 · NRIs — Buying & Selling Property in India.
• "Can the REIT's price fall — could I lose money?" Yes. The unit price is set by the market and moves daily; it can fall, and the distribution can shrink if rents or occupancy drop. A REIT is an investment, not a fixed deposit. Its strengths are yield, liquidity and diversification — not a guarantee against loss.
• "Where do I actually buy one?" Through any regular stockbroker/demat app, on the NSE or BSE, the same way you'd buy a share — search the REIT's name, buy the number of units you want. That ordinariness is itself a safety feature: if 'buying' requires a bank transfer to a platform instead, it isn't a listed REIT.

You've met the ticket, the 90% payout, the three tax buckets and the flat comparison. Now put them in your own hands. The explorer below takes what you'd invest, a distribution yield and your tax slab, and shows the units you'd buy, the payout split into its interest, dividend and return-of-capital slices, the tax due now, your after-tax cash — and the same money in a second flat, side by side. It opens on Aarti's ₹1,00,000 and switches to Suresh's ₹50,00,000 with one tap.

As you move the numbers, watch two things. First, how the return-of-capital slice escapes tax this year and quietly trims the cost base — the bucket that makes a REIT's after-tax yield better than its headline suggests, at the cost of a slightly bigger capital gain later. Second, how completely your slab changes the answer: Aarti keeps nearly all of her ₹6,000; Suresh loses ₹70,200 of his ₹3,00,000. Same instrument, same yield — the after-tax reality depends on whose hands it lands in. That's the whole skill this lesson leaves you with: not a verdict that REITs are good or bad, but the ability to run the real, after-tax, in-my-slab number yourself before anyone sells you a story about property.

Every term this lesson introduced, in one place — the vocabulary of owning real estate in units.

• REIT (Real Estate Investment Trust) — a SEBI-regulated, stock-exchange-listed trust that owns a portfolio of income-producing (mostly commercial) property, divided into units you buy like shares. India had six listed as of mid-2026.
• Unit — one equal slice of the trust; owning units makes you a part-owner of the whole property portfolio and its rent, with no sale deed to any specific flat or floor. The deed-for-unit trade is what makes a REIT tiny-ticket, liquid and hands-off.
• Demat account — the electronic account (via a bank or broker) that holds shares, bonds and REIT/InvIT units digitally; a REIT unit lives here, not in a property registry.
• SEBI — the Securities and Exchange Board of India, the market regulator that registers and polices REITs, InvITs, SM REITs and the exchanges they trade on.
• Trading lot / single-unit lot — the smallest quantity you can trade; SEBI set it to one unit for listed REITs and InvITs in 2021, so the entry ticket is a single unit's price (~₹100–₹490 in mid-2026).
• Listed liquidity — because units trade on the NSE/BSE, you can turn them to cash in minutes at a market price, versus the months (plus a buyer and a registration) a physical flat needs.
• NDCF (net distributable cash flow) — the cash a REIT has left to hand out after running costs, loan interest and set-asides; the base the 90% (or, for SM REITs, 100%) distribution rule applies to.
• Distribution — a REIT's payout to unitholders (its version of a dividend); at least half-yearly for a REIT, at least quarterly for an SM REIT.
• The 90% rule — a REIT must distribute at least 90% of its NDCF; an SM REIT must distribute 100%, at least quarterly. This mandatory payout is what makes a REIT an income investment.
• REIT distribution tax components — the three buckets a payout splits into: interest (taxed at your slab, 10% TDS under 194LBA), dividend (usually slab, sometimes tax-free depending on the building company's tax regime), and return-of-capital (not taxed now; it reduces your cost base and returns as capital gains on sale — Sections 48 / 56(2)(xii), under the Section 115UA pass-through).
• Capital gain on units — the tax when you SELL units: long-term (held over 12 months) at 12.5% over ₹1.25 lakh a year (Section 112A), short-term at 20% (Section 111A); the full computation is Lesson 35.
• SM REIT (Small & Medium REIT) — a SEBI-regulated REIT (framework March 2024) for focused pools: assets ₹50–500 crore, ₹10 lakh minimum, 200+ investors, 100% of NDCF distributed at least quarterly; the regulated way to own a slice of one building.
• Fractional ownership — owning a fraction of a single commercial property with other investors; the old model was unregulated, and SEBI now channels genuine platforms into the SM REIT framework.
• SPV (special-purpose vehicle) — a company/LLP formed to hold one asset; the old fractional platforms used these, and REITs use them too, but a REIT's SPVs sit inside a regulated trust.
• InvIT (Infrastructure Investment Trust) — the infrastructure cousin of a REIT: a SEBI-regulated trust owning power lines, roads, pipelines or towers, in units, at a generally higher (directional ~6–11%) yield; taxed on the same three-bucket basis.
• SEBI SCORES — SEBI's free online complaint-redress system (scores.sebi.gov.in) for grievances against any SEBI-registered product or intermediary; the first formal rung when a regulated investment goes wrong.