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Conferring ‘infrastructure’ status on the affordable housing segment will make borrowing for projects easier, since it will permit increased tenure of loans, reduced interest rates and improved terms.
To make investments in the Indian real estate more lucrative, the Government has allowed 100% FDI through the automatic route and eased the rules for investment in the construction development (townships, housing, built-up infrastructure) sector.
In India, a merger requires the approval of the NCLT and certain other regulatory authorities such as Regional Director, Registrar of Companies and Official Liquidator (OL).
With the advent of REITs in Indian stock markets, the Government has recently introduced various income tax measures to ensure that REIT regulations are at par with world standards and there are effective REIT listings in India.
Owing to the contributions to the GDP, the Real Estate sector has assumed an important place in the economy. That coupled with the need for state-of-the-art residential and commercial projects and diversification into avenues like warehousing, the sector further flourishes. The sector receives stable government support in terms of policies and regulations and the introduction of REIT as a vehicle that helps the sector raise funds and create more value for the stakeholders. Despite the structured reforms by GoI to incentivise the sector, the ever-changing tax and regulatory landscape in India makes real estate transactions quite complex.
In this report, we have touched up on the typical transaction structures in the real estate sector and the key tax and regulatory implications that could prove to be dealmakers or deal-breakers. In addition, it focuses on niche factors governing the real estate sector, such as funding options, internal restructuring, affordable housing and REITs. While this report provides insights from a tax and regulatory perspective, a comprehensive analysis of each type of transaction needs to be undertaken.
"While the Government's reforms have addressed the concerns of the real estate sector, they have also added to the complexity of transactions therein. In such an evolving environment, it becomes imperative to analyse each transaction from a commercial, tax and regulatory aspect."
Joint Leader – Deals, PwC India
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