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Legal Aspects of High-Yield Real Estate Investment in India: REITs and GIFT City

Introduction

India’s real estate sector is undergoing a significant transformation, driven by the convergence of Real Estate Investment Trusts (REITs) and Gujarat International Finance Tec-City (GIFT City). This combination is reshaping investment opportunities, offering both domestic and international investors access to India’s growing real estate market, projected to reach $1 trillion by 2030. However, while these opportunities are promising, understanding the legal framework governing these investments is crucial for ensuring compliance and minimizing risks.

The Legal Framework for REITs in India

REITs in India have matured significantly since their introduction in 2019, with a current market capitalization exceeding ₹2 trillion. The Securities and Exchange Board of India (SEBI) has established a robust regulatory framework to ensure investor protection, transparency, and governance.

Key legal provisions under the SEBI (Real Estate Investment Trusts) Regulations, 2014 include:

• Mandatory Registration: All REITs must be registered with SEBI to operate legally.
• Investment Rules: At least 80% of REIT assets must be invested in completed and income-generating properties, with a maximum of 20% in under-construction projects.
• Distribution Requirements: REITs must distribute at least 90% of their net distributable cash flows to investors, ensuring steady returns.
• Governance Standards: Independent trustees and regular property valuations help maintain transparency and prevent asset mispricing.

These regulations have positioned REITs as a secure and lucrative investment avenue, offering investors exposure to India’s commercial real estate sector with lower entry barriers.

GIFT City: Legal and Regulatory Framework

GIFT City, India’s first operational smart city and International Financial Services Centre (IFSC), offers a distinct legal and regulatory environment designed to attract foreign and domestic investments. Governed by the International Financial  Services Centres Authority (IFSCA), GIFT City provides:

• Tax Incentives: Investors benefit from tax holidays for up to 10 years, exemptions on capital gains, and reduced GST and stamp duties.
• Simplified Foreign Investment: Foreign Exchange Management Act (FEMA) regulations allow seamless foreign investments, making it easier for global investors to participate.
• Single-Window Clearance: Business operations enjoy faster approvals and fewer regulatory hurdles under the Special economic Zone (SEZ) Act, 2005.
• Streamlined Dispute Resolution: A dedicated arbitration framework within the IFSC provides a predictable legal environment for resolving disputes efficiently.

These advantages make GIFT City an ideal destination for REITs looking to optimize tax structures and attract global capital.

Why the Convergence of REITs and GIFT City Matters?

The integration of REITs within GIFT City’s regulatory ecosystem offers a unique investment proposition. Investors stand to gain from:

• Lower tax burdens and enhanced returns due to GIFT City’s special tax regime.
• Easier access to global capital markets with international investors benefiting from a regulatory framework aligned with global standards.
• Better liquidity and risk management with streamlined regulatory processes and legal protections.

This convergence not only enhances the potential for high-yield returns but also provides a more secure and transparent investment structure.

Key Legal Considerations for Investors

While the legal framework is investor-friendly, it is crucial to remain aware of certain risks and obligations:

• Due Diligence: Investors should verify land titles, zoning laws, and environmental clearances before investing.
• Regulatory Compliance: REITs and property transactions must adhere to SEBI and RERA (Real Estate Regulatory Authority) norms.
• Contractual Safeguards: Lease agreements, property acquisitions, and tenant arrangements should be legally sound and in line with Indian real estate laws.
• Market Risks: While regulatory frameworks help mitigate risks, factors like property value fluctuations, interest rate changes, and occupancy levels must be considered.

Risk Mitigation Strategies

To navigate the legal complexities of real estate investments in India, investors should:

• Engage legal experts to ensure compliance with evolving real estate regulations.
• Diversify their portfolios across different REITs and asset classes to manage risk.
• Monitor regulatory updates to stay informed about changes in SEBI, IFSCA, and RERA regulations.
• Structure investments strategically to optimize tax benefits under GIFT City’s framework.

Conclusion

The combination of REITs and GIFT City presents a well-regulated, high-yield investment opportunity in India’s evolving real estate sector. With the right legal knowledge and strategic approach, investors can maximize their returns while ensuring full compliance with regulatory mandates. As India continues its rapid economic expansion, this synergy is expected to remain a significant driver of real estate investment growth.

ESG reporting Greece: Stricter requirements under the new law

Greece is tightening the requirements for corporate sustainability reporting. In future, the obligation will also apply to small and medium-sized companies and companies from third countries listed in Greece. The Ecovis experts explain the future regulations for ESG reporting.

The new Greek Law 5164/2024, which is based on EU Directive 2022/2464, aims to increase transparency, comparability and investor confidence.

Key reporting obligations

• Public interest entities: includes state-owned companies, subsidiaries of the Hellenic Corporation of Assets and Participations, investment firms, collective investment organisations, and microfinance institutions
• Third-country entities: subsidiaries and branches in Greece must submit sustainability reports
• Parent companies of large groups: required to submit consolidated reports only

We will discuss with you what data you need for your sustainability report.

Dimitrios Leventakis, Managing Partner, Certified Internal Auditor – IBFD Certified Tax Advisor, ECOVIS HELLAS Ltd., Athens, Greece

Classification criteria

• Small entities: total assets ≤ EUR 5 m, turnover ≤ EUR 10 m, employees ≤ 50
• Medium entities: Total assets ≤ EUR 25 m, turnover ≤ EUR 50 m, employees ≤ 250

Purpose and impact

• Alignment with EU goals: supports the European Green Deal and aims for climate neutrality by 2050
• Investor confidence: enhances the availability of reliable, standardised data, mitigating risks such as greenwashing
• Efficient capital allocation: ensures financial resources are directed toward sustainable activities
• Market integration: reduces information asymmetry and compliance costs across EU jurisdictions

This regulatory enhancement addresses gaps in sustainability reporting, improves risk assessment, and strengthens market transparency to facilitate the EU’s green transition.

For further information please contact:

Dimitrios Leventakis, Managing Partner, Certified Internal Auditor – IBFD Certified Tax Advisor, ECOVIS HELLAS Ltd., Athens, Greece
Email: dimitrios.leventakis@ecovis.com

Real estate and global minimum tax in Poland: The most important changes in the new tax regulations

Two new tax regulations came into force in Poland on 1 January 2025. They concern real estate tax and the global minimum tax (2nd pillar). The deadline for submitting the property tax return under the new regulations has been extended to 31 March 2025 (previously: 31 January 2025). The Ecovis consultants know exactly what those affected need to take into account.

Real estate tax

The purpose of the amendments was to clarify and eliminate interpretative doubts surrounding the current regulations and ensure their correct application.

The amendments include among other things:

• amendment of the definition of “building” and “structure”
• clarification that buildings and structures are only objects erected as a result of construction work (and not, for example, by assembly)
• introduction of an annex that lists objects defined as a non-building structure
• clarification that in the case of photovoltaic power plants, energy storage facilities, industrial furnaces, cable cars or ski lifts, only the construction part of these installations (e.g. foundations) will be subject to taxation
• removing of the requirement to recognise the facility and installation as a “technical and utility whole” – the decisive criterion for taxation will now be whether the installations ensure the possibility of using the building or non-building structure in accordance with its intended purpose

Since the law was only promulgated at short notice in the Journal of Laws of 29 November 2024 the legislator has introduced the possibility of filing the annual real estate tax return later if the conditions specified in the law are met (by 31 March 2025 instead of the usual deadline of 31 January of a given year).

The extension of the deadline for filing the property tax return is intended to allow taxpayers to adjust to the changes and correctly determine the tax base according to the new regulations (see also info box).

We can help you in determining whether the changes to real estate and global minimum tax in Poland affect your company.

Hubert Kaczyński, Tax Advisor, ECOVIS Poland, Warsaw, Poland

Global minimum tax (Pillar 2)

Regulations on the global minimum tax, which came into effect on 1 January 2025, were introduced on 6 November 2024 in the Law on Compensatory Taxation of Component Units of International and Domestic Groups (the so-called Pillar 2), which was published in the Journal of Laws No. 1685 of 2024.

The tax will not apply to all corporate income tax taxpayers, but to entities that are part of large capital groups (with consolidated revenues exceeding EUR 750,000,000). The regulation introduces compensatory taxation for international and domestic groups seeking to avoid income tax by shifting profits to countries offering lower taxation. It aims to ensure that the group’s effective tax rate in any given country is not less than 15%.

In practice, the tax is a new form of taxation on the income of business entities that will work alongside and supplement the “standard” corporate income tax. This means that every corporate income tax taxpayer will have to verify whether they are subject to the minimum tax.

The calculation of the tax will be multi-level and will require the extraction/calculation of many auxiliary values, which, as a rule, will be derived from financial statements. The starting point for determining the key values and indicators are the rules derived from the accounting standards used and the source data taken from the financial statements.

There are two main reporting obligations for members of tax groups:

1. Filing the GloBE Information Return
2. Filing a qualified minimum top-up tax return (and possibly paying the tax)

The deadlines for companies

The deadline for filing the GloBE (Global Anti-Base Erosion) Information Return and notification of the reporting entity is, as a rule, 15 months starting from the last day of the reporting tax year. In the first year in which the tax is calculated in a given jurisdiction/Poland, this is extended to 18 months.

The deadline for filing the qualified minimum top-up tax return and paying the tax is 18 months after the end of the tax year. In the first year in which the compensatory tax is calculated, this deadline is extended to 21 months after the end of the tax year (see info box).

For further information please contact:

Hubert Kaczyński, Tax Advisor, ECOVIS Poland, Warsaw, Poland
Email: hubert.kaczynski@ecovis.pl