Imagine earning rent from the same Bengaluru tech park that houses India's top IT companies — without owning a single square foot of property. Or collecting toll revenue from a national highway every time a truck crosses it — without building a single kilometer of road. That is exactly what Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) make possible for Indian retail investors today.
These two SEBI-regulated investment vehicles have quietly transformed India's investment landscape since their introduction in 2014 — and 2026 is shaping up to be their breakout year. The Nifty REITs and InvITs Index delivered total returns of 25.48% in 2025, far outpacing the Nifty 50's 11.88%. SEBI reclassified REITs as equity instruments effective January 1, 2026. Distributions by listed REITs and InvITs jumped 55.4% year-on-year in Q2 FY26 to over ₹3,300 crore. And India's Asset Monetization Plan 2025–30 is set to unlock enormous new InvIT opportunities across roads, railways, power, and telecom.
Yet most Indian investors still use REITs and InvITs interchangeably — or avoid both because they seem complicated. This complete guide cuts through all the confusion. Here is everything you need to know about the difference between REITs and InvITs, how each works, how they are taxed, who should invest in which, and which specific trusts are worth your attention in 2026.
1. What Is a REIT? (Real Estate Investment Trust)
A Real Estate Investment Trust (REIT) is a SEBI-regulated trust that pools money from investors to own, operate, and manage a portfolio of income-generating commercial real estate assets. Think of it as a mutual fund — but instead of stocks or bonds, it owns office buildings, shopping malls, warehouses, and hotels that generate rental income. That income is then distributed to investors as regular payouts.
How a REIT Works
- Investors buy units of the REIT listed on NSE or BSE through their Demat account — just like buying shares
- The REIT uses pooled capital to acquire commercial real estate assets through Special Purpose Vehicles (SPVs)
- Tenants — multinational corporations, IT companies, retail chains — pay rent to the SPVs
- The REIT distributes at least 90% of its distributable cash flows to unitholders as regular payouts
- Investors earn through a combination of rental income, interest income, capital repayment, and unit price appreciation
SEBI Rules for REITs in India
- At least 80% of the REIT's total asset value must be invested in completed, income-generating properties
- No more than 20% can be invested in under-construction properties, debt instruments, listed securities, or cash equivalents
- Mandatory distribution of at least 90% of distributable cash flows to unitholders
- Minimum of 200 unitholders required to be maintained post-listing
- SEBI reclassified REITs as equity-related instruments effective January 1, 2026 — meaning mutual funds can now include them within their equity allocation limits
Major REITs Listed in India (2026)
- Embassy Office Parks REIT — Sponsor: Embassy Group & Blackstone | 50+ million sq ft of commercial office space in Bengaluru, Pune, Mumbai, and Noida | India's largest REIT | Launched 2019
- Mindspace Business Parks REIT — Sponsor: K Raheja Corp & Blackstone | High-quality offices in Mumbai, Hyderabad, Pune, and Chennai | Diverse multinational and Indian corporate tenant base | Launched 2020
- Brookfield India Real Estate Trust — Sponsor: Brookfield Asset Management | Office campuses in Mumbai, Gurugram, Noida, and Kolkata
- Nexus Select Trust — India's first retail mall REIT | Sponsor: Blackstone | Portfolio of 17 Grade-A shopping malls across 14 cities
2. What Is an InvIT? (Infrastructure Investment Trust)
An Infrastructure Investment Trust (InvIT) is a SEBI-regulated trust that pools money from investors to own and operate a portfolio of income-generating infrastructure assets — highways, power transmission lines, gas pipelines, renewable energy parks, and telecom towers. The trust collects tolls, transmission tariffs, usage charges, and contracted fees from these assets and distributes them to investors.
How an InvIT Works
- Investors buy units of the InvIT listed on NSE or BSE (public InvITs) or through private placement (private InvITs)
- The InvIT holds infrastructure assets directly or through SPVs — roads, power lines, gas pipelines, etc.
- Revenue is generated through long-term concession agreements, toll collections, power purchase agreements, or gas transmission tariffs
- At least 90% of distributable cash flows are mandatorily distributed to unitholders
- Sponsors — typically large infrastructure companies or government entities — transfer mature operational assets into the InvIT to recycle capital for new projects
SEBI Rules for InvITs in India
- InvITs can invest in both operational and under-construction infrastructure projects — greater flexibility than REITs
- At least 80% of InvIT assets must be in revenue-generating infrastructure projects
- No more than 10% of total InvIT assets in under-construction projects
- Mandatory distribution of at least 90% of distributable cash flows
- InvITs remain classified as hybrid instruments by SEBI as of January 2026 — unlike REITs which were upgraded to equity
Major InvITs Listed in India (2026)
- IRB InvIT Fund — India's first publicly listed InvIT | Focus: toll road projects across national highways | Revenue from toll collections on high-traffic road corridors
- India Grid Trust (IndiGrid) — Focus: power transmission lines | Revenue from long-term transmission service agreements with electricity distribution companies
- PowerGrid Infrastructure Investment Trust — Sponsor: Power Grid Corporation of India | Government-backed power transmission InvIT | Extremely stable revenue backed by government payment obligations
- Highways Infrastructure Trust — Focus: highway assets under the National Monetization Pipeline
- Cube Highways Trust — Sponsor: I Squared Capital | Focus: toll-based highway assets across India
3. REITs vs InvITs: Head-to-Head Comparison Table
Parameter |
REITs |
InvITs |
|
Full Form |
Real Estate Investment Trust |
Infrastructure Investment Trust |
|
Introduced in India |
SEBI, 2014 | First listing 2019 |
SEBI, 2014 | First listing 2017 |
|
Underlying Assets |
Commercial offices, malls, warehouses, hotels |
Highways, power grids, pipelines, renewable energy, telecom towers |
|
Revenue Source |
Rent & lease income from tenants |
Tolls, tariffs, transmission fees, usage charges |
|
Mandatory Distribution |
90% of distributable cash flows |
90% of distributable cash flows |
|
SEBI Classification |
Equity (reclassified Jan 2026) |
Hybrid |
|
Asset Maturity Rule |
Min. 80% in completed, income-generating properties |
Can invest in under-construction infrastructure projects |
|
Min. Investment |
1 unit (₹100–₹400 range) |
1 unit (private InvITs can require higher) |
|
Risk Level |
Moderate — stable rental income |
Moderate-High — project & regulatory risk |
|
Listing |
NSE & BSE (publicly traded) |
NSE & BSE (public & private listed) |
|
Return Drivers |
Rental income + NAV appreciation |
Usage fees + NAV appreciation + capital recycling |
|
Volatility |
Lower — stable occupancy patterns |
Higher — project-based revenue variability |
|
Examples (India) |
Embassy, Mindspace, Brookfield, Nexus |
IRB InvIT, India Grid Trust, PowerGrid InvIT, IndiGrid |
|
Nifty REITs & InvITs Index Return (2025) |
25.48% total returns |
Included in same index benchmark |
|
Best Suited For |
Income-focused investors, conservative-moderate risk |
Long-term infrastructure bulls, moderate-high risk appetite |
4. 10 Key Differences Between REITs and InvITs — Explained in Detail
Difference 1: Underlying Asset Class
- REITs invest exclusively in real estate — commercial offices, retail malls, warehouses, hospitality assets, and industrial parks that generate rental income
- InvITs invest in infrastructure — toll roads, power transmission lines, gas pipelines, renewable energy assets, and telecom towers that generate usage-based revenues
- This is the most fundamental difference: REITs are a real estate play; InvITs are an infrastructure play
Difference 2: Revenue Model
- REIT revenue comes from rent and lease agreements — typically with long-term corporate tenants under 3 to 9-year lease contracts with built-in escalation clauses
- InvIT revenue comes from usage fees, tolls, tariffs, and contracted payments — which can be more variable but are often backed by long-term concession agreements with government bodies
- REIT rental income is relatively predictable; InvIT toll and usage income depends on traffic volumes, economic activity, and regulatory changes
Difference 3: SEBI Classification (Critical — Changed January 2026)
- REITs are now classified as EQUITY instruments by SEBI effective January 1, 2026 — meaning equity mutual fund schemes can include REITs within their equity limits, dramatically expanding potential investor base
- InvITs remain classified as HYBRID instruments by SEBI — they continue to count within the hybrid allocation headroom of 10% NAV for mutual fund schemes
- This reclassification is a watershed moment: REIT units could eventually enter equity indices like Nifty 50 or Sensex, making them eligible for index funds and ETFs that were previously unable to hold them
Difference 4: Asset Maturity Requirements
- REITs must invest at least 80% of assets in completed, income-generating properties — this is a conservative, stability-first mandate
- InvITs can invest in under-construction infrastructure projects — up to a cap — giving them more latitude to back projects earlier in their lifecycle, with potentially higher risk and return
- The result: REITs are structurally more conservative than InvITs, even before considering the nature of their respective asset classes
Difference 5: Risk Profile
- REITs carry moderate risk — primarily from office market vacancy rates, property value fluctuations, tenant default, and interest rate sensitivity
- InvITs carry moderate-to-high risk — exposed to project execution delays, traffic volume shortfalls on highways, regulatory tariff revisions, and longer revenue gestation periods for under-construction assets
- Both are sensitive to interest rate movements — when RBI cuts rates (as it did four times in 2025, reducing repo from 6.50% to 5.25%), both REITs and InvITs benefit through lower borrowing costs and improved NAV
Difference 6: Return Profile
- The Nifty REITs and InvITs Index delivered 25.48% total returns in 2025, outperforming the Nifty 50 (11.88%) by a wide margin — demonstrating the asset class's maturity
- The index has delivered approximately 13% annualised returns since inception in 2019, with lower volatility than pure equities — offering an attractive risk-adjusted return profile
- REITs tend to deliver more stable, predictable income; InvITs can deliver higher capital appreciation if their underlying infrastructure assets perform above traffic or tariff forecasts
Difference 7: Taxation
- REIT distributions have multiple components — each taxed differently: rental income (taxed at individual slab rate), interest income (taxed at slab rate), capital repayment (not immediately taxed — reduces cost basis for future capital gain calculation), and dividends (taxed at slab rate)
- InvIT distributions are predominantly taxable — most InvIT payouts are structured as interest income taxable at the investor's applicable slab rate
- Capital repayment component in REITs is the most tax-efficient — it reduces the acquisition cost of units rather than being taxed immediately, making long-term REIT holding tax advantageous
- Non-resident investors: REIT dividends taxed at 10%, interest income at 5% — treaty benefits may apply
Difference 8: Liquidity
- Both REITs and InvITs are listed on NSE and BSE, making them tradeable during market hours through a Demat account — converting illiquid real assets into liquid exchange-traded instruments
- Public REITs and public InvITs offer equal liquidity — however, private InvITs (which are not exchange-listed) have restricted transferability and much lower liquidity
- REIT units typically trade in the ₹100–₹400 range, making them highly accessible to retail investors without requiring large capital outlay
Difference 9: Thematic Exposure
- REITs give exposure to India's commercial real estate boom — driven by global capability centres, IT sector expansion, retail consumption growth, and warehousing and logistics demand
- InvITs give exposure to India's infrastructure decade — driven by the National Infrastructure Pipeline, Asset Monetization Plan 2025–30, highway expansion, power sector upgrades, and renewable energy transition
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