REITs India 2026: How to Invest, How Distributions Are Taxed, and What to Watch For

Commercial real estate — Grade-A office parks leased to Amazon, Google, and Goldman Sachs — has historically been accessible only to HNIs and institutional investors. REITs changed that. Since SEBI reduced the minimum lot size to one unit in 2021, you can buy into the same portfolio for the price of a single share. India now has six listed REITs covering offices and retail malls. Here is how they work, how your distribution income is taxed, and what to check before you buy.

India's Six Listed REITs (2026)

India had four listed REITs through mid-2025. The fifth — Knowledge Realty Trust — listed on August 18, 2025, becoming India's largest office REIT by Gross Asset Value at the time of its IPO. The sixth, Bagmane Prime Office REIT, an office REIT with six business parks in Bengaluru, listed on May 14, 2026; it is not yet in the table below, which uses full-year FY26 data. Current distribution yields for the four established REITs range from approximately 5.5% to 6.7% based on FY 2025-26 actuals. These vary each quarter; the figures below are full-year FY26 data.

How to Buy a REIT in India

REITs trade like equity shares on NSE and BSE. You need a Demat account with any SEBI-registered broker. All major brokers — Zerodha, Groww, ICICI Direct, HDFC Securities, Axis Direct, Kotak Securities — support REIT trading. If you don't already have one, our step-by-step demat account guide covers the documents, e-KYC process, and how discount brokers compare to full-service ones on cost.

1. Open or log into your existing Demat and trading account
2. Search for the REIT by ticker: EMBASSY / MINDSPACE / BIRET / NEXUS / KRT (or Bagmane Prime Office REIT by name) on NSE or BSE
3. Place a buy order for a minimum of 1 unit — SEBI reduced the minimum from 200 units to 1 unit in 2021, making REITs accessible at any investment size
4. Settlement is T+1 — units are credited to your Demat account the next working day
5. At tax time, you will receive Form 64B from the REIT showing the exact breakdown of each distribution: interest, dividend, return of capital — needed to file correctly

How REIT Distributions Are Taxed

REITs are pass-through vehicles — the income character is preserved when distributed. A REIT that earned rental income from its property-owning SPVs passes that to you as rental income, not as a generic dividend. Understanding the breakdown matters because each component is taxed differently. Most REITs disclose the per-distribution split in quarterly investor announcements.

Capital Gains When You Sell

Budget 2024 (effective July 23, 2024) cut the LTCG holding period for listed REIT units from 36 months to 12 months — bringing REITs in line with listed equities. Gains on units held for more than 12 months are Long-Term Capital Gains; gains on units held for 12 months or less are Short-Term Capital Gains.

The Finance Act 2025 (effective April 1, 2026) moved REIT LTCG to Section 112A, making the ₹1.25 lakh annual LTCG exemption available for gains realised from FY 2026-27 onwards. If you sold REIT units before April 1, 2026, LTCG was under Section 112 and the exemption was not available — a distinction that matters for the current filing year. From April 1, 2026 the Income-tax Act, 2025 carries these provisions under new section numbers.

Key Risks to Understand Before Buying

• Office concentration: Embassy and Mindspace each have over 60% of their portfolios in Bengaluru. A meaningful IT-sector correction or new supply wave in Bengaluru would hit both. Brookfield's multi-city spread (Mumbai, Noida, Gurugram, Kolkata) offers broader geographic diversification.
• Interest rate sensitivity: At 5.5–6.7% distribution yields, Indian REITs trade close to the 10-year government bond yield (around 7%). When bond yields rise, REIT units tend to fall as yield-seeking capital rotates to lower-risk fixed income.
• Liquidity: Daily traded volumes in Indian REITs are meaningfully lower than large-cap equities. Exiting a large position quickly may move the price against you.
• Return of capital accounting: Distributions classified as return of capital are not taxed in the year received, but they reduce your cost of acquisition. When you eventually sell, your taxable gain is correspondingly larger. Track this separately or the capital gains calculation at exit will surprise you.
• Retail malls (Nexus only): Mall occupancy and income are tied to discretionary consumer spending and face long-term e-commerce headwinds — a different risk profile than office REITs.
• Diversification vs. control: a regular REIT spreads your money across dozens of properties automatically. If you'd rather pick one specific commercial building instead, SEBI's newer SM REIT framework allows exactly that, at a ₹10 lakh minimum ticket, with its own tax and liquidity trade-offs.

REITs fit naturally alongside NPS and PPF in a retirement-oriented portfolio as a real estate income layer. Our retirement planning guide covers how to allocate across asset classes with an age-based glide path. For drawing an income from your corpus once you retire, see how an SWP on equity mutual funds compares as a tax-efficient drawdown strategy. If you want the infrastructure equivalent of this product — toll roads and power lines instead of office buildings, with a similar payout structure but a genuinely different risk profile — see our guide to InvITs.