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Alternatives for larger portfolios

REITs and InvITs

Earn a share of rent from offices and malls, or tolls and tariffs from infrastructure, without buying property.

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Regulator
SEBI
Minimum (listed)
One unit on the stock exchange
Payouts
At least 90% of distributable cash flow
Account needed
Demat and trading account
Risk level: Moderate

Unit prices move with the market and with interest rates. Payouts depend on occupancy, tolls and contracts.

What is it?

A Real Estate Investment Trust (REIT) owns completed, income-producing properties such as office parks and shopping malls. An Infrastructure Investment Trust (InvIT) owns assets such as toll roads, power transmission lines and gas pipelines.

Both are listed on the stock exchange. They must distribute at least 90% of their net distributable cash flows to unitholders, so most of your return comes as regular payouts, usually every quarter.

How it works

  1. The trust owns the assets through special purpose vehicles and an investment manager runs them.
  2. Rent, tolls or tariffs flow up to the trust and are distributed to unitholders.
  3. Units trade on the exchange like shares, so prices change daily.
  4. SEBI rules require REITs to keep most of their assets in completed, rent-generating property.

Types

Office and retail REITsOwn office parks and malls leased to businesses.
Infrastructure InvITsOwn roads, transmission lines, pipelines, towers or renewable energy assets.
Small and medium REITsA newer SEBI category for smaller properties, with higher minimum investments.

Benefits and risks

Benefits

  • Regular income from real assets.
  • Access to large commercial property and infrastructure with a small amount.
  • Listed and regulated, with periodic valuations and disclosures.
  • Easier to buy and sell than physical property.

Risks and drawbacks

  • Unit prices fall when interest rates rise or demand weakens.
  • Payouts can vary with vacancies, lease renewals or traffic.
  • Some units trade thinly.
  • Tax on payouts is more complex than for shares.

How it is taxed

  • Payouts are split into interest, dividend and repayment of debt, and each part is taxed differently. The trust's statement shows the split.
  • Interest is taxed at your slab rate. Dividends are tax-free in your hands in most cases, but not when the underlying company has chosen the lower corporate tax regime.
  • Units held over 12 months: gains taxed at 12.5%; earlier at 20%.
Rules for FY 2026-27, reviewed November 2026. Surcharge and cess apply on top. Tax rules change, so confirm before you file. Our tax team can help with your return.

Who it may suit

Investors who want regular income and exposure to property or infrastructure, and who can accept market price swings.

Getting started

  1. Read the trust's latest investor presentation: occupancy, lease expiry, debt and payout history.
  2. Compare the distribution yield with bond yields and the trust's debt level.
  3. Buy units on the exchange through your demat account.
  4. Keep the tax statement each trust sends you for your return.

Common questions

Is a REIT the same as buying property?

No. You own units of a trust that owns several properties. You get diversification and liquidity, but no control over individual properties and some market price risk.

Are the payouts guaranteed?

No. They depend on the rent or tolls collected and the trust's expenses and debt.

This guide is general education, not investment, tax or legal advice, and does not recommend any product. Investments in securities markets are subject to market risks; read all related documents carefully before investing.