REIT / InvIT Yield

How it works

SEBI's REIT and InvIT regulations require trusts to distribute at least 90% of net distributable cash to unit-holders every six months. Distributions are split across interest, dividend and return-of-capital components — each taxed differently in your hands. Interest is taxed at slab rate, dividends at slab (if SPV did not opt for 22% concessional regime, else exempt), and return-of-capital reduces your cost of acquisition and is taxed only on eventual sale.

Worked example

Embassy Office Parks REIT at ₹360 with FY 2024-25 distribution of ₹22 per unit gives a distribution yield of 22/360 = 6.1%. If the 30% slab applies and 80% of the distribution is interest, post-tax yield drops to ~4.7%. Add ~5% capital appreciation and the total return is ~10% — broadly competitive with debt mutual funds but with property-cycle risk.

When to use this

• Building a passive-income portfolio alongside FDs and SCSS
• Comparing REIT yield with the 2–3% gross yield on direct residential property
• NRIs allocating to Indian commercial real estate without RERA / TDS headaches
• Retirees diversifying from PPF / SCSS into listed real-asset income

For direct property comparison, use the rental yield calculator. For capital-gains math on REIT unit sale, see the capital gains calculator.