NRI investment in Indian REITs: how to invest and tax treatment
NRIs can invest in Indian REITs (Mindspace, Embassy, Nexus, Brookfield) through an NRI demat account (NRE or NRO route). REIT distributions include a mix of dividend, interest and return of capital — each taxed differently. Units traded on NSE/BSE attract the same capital gains tax as equity. Dividends are taxable in the NRI's hands.
NRIs buy REITs via NRI demat — same as listed equity
NRIs can buy units of Indian REITs (Embassy Office Parks, Mindspace, Nexus Mall REIT, Brookfield India REIT) through an NRI demat account on NSE or BSE. The process is the same as buying equity shares. REIT distributions are a mix of dividend (taxable), interest (taxable) and return of capital (not immediately taxable). Capital gains on unit sale are taxed like equity.
Key points
- Buy via NRI demat — REITs are listed on NSE/BSE — NRIs purchase through their existing NRI demat account linked to NRE or NRO.
- Distribution tax is complex — REIT distributions comprise dividend, interest and return of capital — each component has a different tax treatment.
- Repatriable via NRE route — If purchased via the NRE (repatriable) demat, both REIT income and capital gains are repatriable.
How NRIs invest in Indian REITs
Open or use an existing NRI demat account (NRE for repatriable, NRO for non-repatriable route).
REITs are traded like stocks on NSE and BSE — search by ticker (e.g. EMBASSY, MINDSPACE, NEXUS, BIRET) on your broker's app.
PIS permission is required for the NRE (repatriable) route — your bank applies for this. The NRO route does not require PIS.
Minimum investment is one unit — priced around ₹300–₹400 for most REITs.
Tax on REIT distributions for NRIs
REIT distributions are broken down into: Dividend (taxable at 30% TDS for NRIs unless DTAA applies), Interest (taxable at 30% TDS for NRIs), Return of Capital (reduces cost basis, taxed as capital gain on eventual sale).
Capital gains on REIT unit sale: held under 12 months = STCG at 15%. Held 12+ months = LTCG at 10% above ₹1.25 lakh threshold.
TDS is deducted by the REIT on each distribution. File ITR to reconcile or claim refund.
Frequently asked questions
Are Indian REITs good for NRIs?
REITs provide exposure to Indian commercial real estate without the complexity of direct property purchase (no stamp duty, no property management). The distribution yield is typically 6–8% but income tax applies. Evaluate after-tax yield against NRE FD rates and equity alternatives.
Can NRIs in the USA invest in Indian REITs?
Technically yes through an NRI demat account, but US NRIs should check FATCA implications and whether their US broker or Indian broker has any restrictions for US-based NRIs.
How are REIT capital gains taxed differently from direct property?
REIT units are treated like listed equity — LTCG at 10% after 12 months (not 24 months for physical property). Physical property LTCG is 12.5% after 24 months. REITs also avoid stamp duty and TDS-on-purchase obligations.