You have been saving up to buy a small flat, hoping to rent it out for some steady side income one day. Then you check prices in your city and realize a decent 2BHK now costs more than you will save in the next 10 to 15 years at this rate.
A friend mentions she already gets quarterly "rental income," except she never bought a flat or dealt with a tenant. She invested in a REIT instead, and calls it "as steady as a fixed deposit." A search that night turns up a different picture: REIT prices in India have fallen by double digits during past rate hikes.
If that left you unsure whether your friend's REIT behaves like a fixed deposit or like a stock, I would call you a "Wanderer." You are not wrong to be unsure. A REIT is genuinely both. Part of it behaves like a bond. Part of it behaves like a stock. Most explainers only show you one half.
So, dear Wanderer, here at The Bazaar Guru, let's look at both halves properly.
In This Post:
What Is a REIT, in Plain Words
The Bond Half and the Stock Half
The 5 REITs You Can Buy in India Today
How to Buy a REIT Unit
How REIT Income Is Taxed, With a Worked Example
REIT vs Buying a Flat
What Could Go Wrong
Common Mistakes Beginners Make
FAQ
Key Takeaways
Go Deeper
Disclaimer
What Is a REIT, in Plain Words
A Real Estate Investment Trust, or REIT, owns buildings that earn rent: office parks, malls, business complexes. It is regulated by SEBI, India's stock market watchdog, and listed on the exchange just like a company's share.
That means you can buy a small piece of it in seconds, using the same Demat account (the account that holds your shares electronically) you already use for stocks. No property paperwork, no lawyer.
Picture it this way. A mutual fund pools money to buy stocks or bonds. A REIT pools money to buy rent-earning buildings instead. You own a slice of the rent, with no tenant to meet and no tap to fix. It works much like an ETF, bought and sold on the exchange like a stock.
The Bond Half and the Stock Half
Here is the "bond half" your friend was describing. SEBI requires every REIT to pay out at least 90% of its net distributable cash flows to unitholders, usually every quarter. That rule does not exist for regular company shares. It exists specifically for REITs, which is why the payout feels steady, almost like a fixed deposit's interest.
Now here is the "stock half" that those warning articles were pointing at. A REIT's unit price still trades on the open market. It moves with interest rates, investor mood, and how the wider real estate sector is doing, the same forces that push any stock up or down. A fixed deposit's value never does this. A REIT's can.
So both articles you read were right. One was describing the payout. The other was describing the price. A REIT is not a fixed deposit wearing a real estate costume. It is a hybrid, with a bond-like income rule bolted onto a stock-like trading price.
The 5 REITs You Can Buy in India Today
As of late July 2026, India has five REITs listed on the NSE and BSE. Here is where each one stood between 21 and 23 July 2026. Prices move daily, so treat this as a snapshot, not a live quote.
(Swipe left or right to see the full table on a phone)
| REIT | What It Owns | Unit Price | Market Cap |
|---|---|---|---|
| Embassy Office Parks REIT | Office parks in Bengaluru, Mumbai, Pune, NCR, Chennai | ~₹450 | ~₹42,660 crore |
| Mindspace Business Parks REIT | Office parks in Hyderabad, Mumbai, Pune, Chennai | ~₹495 | ~₹32,950 crore |
| Knowledge Realty Trust | Commercial office portfolio, sponsored by Sattva and Blackstone | ~₹116 | ~₹51,510 crore |
| Brookfield India Real Estate Trust | Office assets in Mumbai, NCR, Kolkata | ~₹340 | ~₹28,300 crore |
| Nexus Select Trust | 19 retail malls across 15 cities | ~₹167 | ~₹25,375 crore |
Worth noticing: Knowledge Realty Trust listed only in 2025, yet is already the largest of the five by market value, ahead of Embassy, which has traded since 2019. That gap is the "stock half" at work. The market prices in growth expectations, the same way it prices a share above or below its book value.
Together, these five REITs are worth roughly ₹1.8 lakh crore. Recent dividend yields have generally sat in the 5% to 7% range, though yields shift as unit prices and payouts change, so always check the current figure before investing.
How to Buy a REIT Unit
Buying a REIT works exactly like buying a stock. No special account, no extra forms.
Step 1: Use your existing Demat and trading account. Any SEBI-registered broker supports REIT trading on the NSE and BSE.
Step 2: Search for the REIT by its exchange symbol: EMBASSY, MINDSPACE, KRT, BIRET, or NEXUS.
Step 3: Place a buy order. SEBI cut the minimum lot size to just 1 unit, so you can start with whatever a single unit costs, roughly ₹100 to ₹500. Some investors also add a fixed amount every month, the same habit behind a SIP, instead of buying units in one lump sum.
You may also want to read: Gold ETF vs Physical Gold vs SGB: Which Wins?
How REIT Income Is Taxed, With a Worked Example
This is the part most explainers rush through, and it is exactly the kind of gap that leaves people unsure. REITs follow a "pass-through" tax rule under Section 115UA of the Income Tax Act. The REIT itself does not pay tax on this income. It passes through to you, the unitholder, who pays tax instead.
A single quarterly payout can contain up to four different pieces, and each is taxed differently. Say you receive ₹1,000 in a quarter from a REIT you hold. A realistic breakup might look like this:
- ₹400 as interest: taxed at your regular income tax slab rate, usually with tax already deducted at source (TDS) before it reaches you.
- ₹350 as dividend: taxed at your slab rate only if the REIT's underlying property company chose a lower corporate tax option (Section 115BAA). If it did not, this ₹350 is tax-free, since it was already taxed once at the company level.
- ₹150 as rental income: generally tax-free in your hands under the pass-through rule.
- ₹100 as capital repayment: not taxed as income at all. It simply lowers your original purchase cost, which affects the tax you owe later when you sell.
These figures are illustrative, meant to show how one payout splits, not a guaranteed ratio. Your actual REIT's distribution statement will show the real breakup for that quarter.
Selling your REIT units brings capital gains tax into play too. Sell within 12 months and short-term capital gains tax applies at 20%. Hold for more than 12 months and long-term capital gains tax applies at 12.5% instead.
One detail many investors miss: the ₹1.25 lakh yearly tax-free allowance available on regular stock market gains does not currently extend to REIT units, for the financial year ending March 2026. This is expected to change from the following financial year onward.
REIT vs Buying a Flat
A REIT and a rental flat both give you real estate exposure, but they behave very differently as investments.
A flat needs a large lump sum, stamp duty, brokerage, and ongoing maintenance. Selling one can take months.
A REIT unit can be bought or sold in seconds on the exchange. It needs no tenant management and can be started with a few hundred rupees. What you give up is a physical asset you can live in or fully control, and your returns move with market sentiment, not just local rental demand.
What Could Go Wrong
Go back to the "stock half" from earlier. That is where the risk sits. If a major tenant leaves, or an entire sector slows down, occupancy can drop. A long-term rise in work-from-home habits, for instance, would likely hurt office-focused REITs more than mall-focused ones.
Interest rates matter even more. When rates rise, REIT yields tend to look less attractive next to safer options like bonds or fixed deposits, which can pull unit prices down even if the buildings themselves are performing fine. This is exactly the risk those late-night search results were warning about.
Common Mistakes Beginners Make With REITs
Treating it as a pure fixed deposit substitute. This is the mistake at the heart of this post. A REIT's payout rule is bond-like, but its price is not fixed. Go in expecting FD-level stability and a bad quarter can feel like a shock it was never meant to be.
Assuming every REIT dividend is tax-free. It depends entirely on whether the underlying property company opted for the lower corporate tax rate under Section 115BAA. Skip this check and you may under-report your tax.
Confusing distribution yield with total return. The quarterly payout is only one half of your return. The unit price can still fall enough to wipe out a year's worth of distributions, so look at both numbers together, not the yield alone.
Ignoring tenant concentration. A REIT with a handful of large tenants is riskier than one spread across many smaller ones, even if both show similar occupancy today. Check the tenant mix before you buy, not after occupancy drops.
FAQ
Is a REIT the same as a fixed deposit?
No. A REIT must pay out most of its income regularly, which feels FD-like, but its unit price still moves up and down on the stock exchange, which an FD's value never does. Treat a REIT as a hybrid, not a substitute for an FD.
What is a REIT in simple terms?
A REIT is a SEBI-regulated trust that owns rent-earning commercial buildings and is listed on the stock exchange, letting you invest in real estate the same way you would buy a stock.
How much money do I need to invest in a REIT in India?
As little as the price of a single unit, roughly ₹100 to ₹500, since SEBI reduced the minimum lot size to just 1 unit.
How many REITs are listed in India right now?
Five, as of late July 2026: Embassy Office Parks REIT, Mindspace Business Parks REIT, Knowledge Realty Trust, Brookfield India Real Estate Trust, and Nexus Select Trust.
Are REIT dividends tax-free in India?
Not always. The dividend part is tax-free only if the REIT's underlying property company has not opted for the lower corporate tax rate under Section 115BAA. If it has, that dividend is taxed at your regular slab rate instead.
What is the holding period for long-term capital gains on REIT units?
More than 12 months, the same rule used for listed stocks.
Key Takeaways
- A REIT is a hybrid: a bond-like payout rule (at least 90% of cash flows distributed) attached to a stock-like trading price.
- India has 5 listed REITs as of July 2026: Embassy, Mindspace, Knowledge Realty Trust, Brookfield, and Nexus Select, together worth roughly ₹1.8 lakh crore.
- You can start investing with a single unit, typically ₹100 to ₹500, through your existing Demat account.
- A REIT payout can include up to 4 differently-taxed pieces: interest, dividend, rental income, and capital repayment. Check your statement before filing your ITR.
- Because the unit price still trades like a stock, a REIT is not a substitute for a fixed deposit, even though its payout rule feels similar.
Go Deeper
- What Is an Index Fund? A Simple Guide for Indian Investors
- Types of Mutual Funds in India: The Complete Guide
Disclaimer: This content is for educational purposes only and should not be considered investment advice. Markets carry risk, and past patterns do not guarantee future performance. Please consult a SEBI-registered investment advisor before making any investment decisions.