Friday, February 2, 2007

SEBI to issue guidelines for real estate mutual funds

The Securities and Exchange Board of India (SEBI) is planning a number of moves for growing the real estate mutual fund (REMFs) business in India. It is moving towards enforcing a minimum closing period of three years for REMFs. SEBI also plans to allow such funds to announce their net asset values (NAV) every quarter instead of daily as is currently the practice. A tax regime for real estate mutual funds is also being worked on, based on the US model, and will be announced in the next budget. The US model allows the trusts exemption from tax provided they share 90% of their taxable income as dividends with investors. SEBI would most likely be guiding REMFs to invest 70 to 80% of their funds in real estate projects directly, and the rest in real estate companies.

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