IFSCA panel proposes mortgage REITs, tax parity and dual listings
Mumbai, Jul 15, 2026
An IFSCA expert committee has proposed introducing mortgage REITs, tax parity with Sebi-registered trusts and dual listings to deepen the REIT and InvIT ecosystem in GIFT IFSC
An expert committee set up by the International Financial Services Centres Authority (IFSCA), the unified financial regulator in GIFT City, has recommended reforms for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
The committee’s report proposes introducing Mortgage REITs (mREITs) in GIFT-IFSC as an alternative channel for real estate financing. They also support the development of securitisation markets, norms for regulatory parity, and taxation relaxations.
mREITs finance real estate instead of owning projects, operating more like fixed-income managers. They earn interest on mortgage-backed securities. mREITs fund investments with a combination of equity, debt and other instruments, earning profit from their net interest margin — the spread between their income from mortgage assets and funding costs.
The investments of mREITs are secured by real estate assets provided as collateral against loans.
“The way a REIT unlocks the capital invested by a developer in real estate projects and in that process creates a pool of investors looking for such exposure, Mortgage REITs allow the unlocking of the capital that banks/NBFCs have lent to the buyers in these projects and bring in investors that have an appetite to take exposure to such debt,” the report said. It noted that the United States, Canada, Australia and the United Kingdom have mortgage REITs.
The committee also highlighted the potential for “mixed” and “global” REITs, which would allow asset owners to pool multi-jurisdiction portfolios and offer diversified exposure to a wider set of investors.
The committee — chaired by Ananta Barua, former whole-time member of the Securities and Exchange Board of India (Sebi) — also outlines an approach for Green REITs and emerging structures such as Small and Medium REITs in the financial hub.
In a bid to provide momentum to the IFSC REIT/InvIT ecosystem, the committee has recommended enabling Sebi-registered REITs and InvITs to access GIFT-IFSC exchanges through depository receipts and dual or secondary listing. This may require Sebi to enable the mechanism in discussion with the IFSCA.
“This would provide domestic REITs and InvITs access to a wider global investor base, including NRIs and international institutions, while simultaneously creating a strong foundation for the development of the REIT/InvIT ecosystem in GIFT IFSC,” the report noted.
Other key suggestions include exempting investments made by IFSC REITs and InvITs into Indian equities from sectoral caps and a three-year lock-in requirement under the automatic route. The report seeks to exempt Indian sponsors of such REITs and InvITs from the overseas portfolio investment limit to facilitate participation in IFSC-based structures.
The committee has also recommended providing tax parity between IFSCA-registered and Sebi-registered Reits and InvITs by amending the definition of a business trust under the Income Tax Act, 2025.
“Additionally, it recommends amending Schedule V (Sl. No 3) to exempt foreign-sourced income from offshore investments in the hands of non-resident unitholders, bringing it on par with Category I/II AIFs,” the committee noted.
[The Business Standard]
