SEBI Reclassifies REITs as Equity Instruments for MF and SIF Investments

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SEBI REIT investment classification

Circular No. HO/24/13/12(1)2025-IMD-POD-2/I/157/2025; Dated: 28.11.2025

SEBI has revised the investment classification framework for Real Estate Investment Trusts (REITs) to facilitate wider participation by Mutual Funds (MFs) and Specialised Investment Funds (SIFs).

1. Reclassification of REITs

To enable greater institutional exposure to real estate-backed securities, SEBI has reclassified REITs as equity-related instruments.

  • This change ensures that investments in REIT units by MFs and SIFs will now fall under the equity allocation category, improving flexibility for fund managers and supporting broader investor participation.
  • The revised classification will assist in better portfolio alignment and may allow higher permissible exposure limits for funds that are otherwise restricted under non-equity allocations.

This reclassification will be effective from January 1, 2026.

2. Classification of InvITs Remains Unchanged

SEBI has clarified that Infrastructure Investment Trusts (InvITs) will continue to be treated as hybrid instruments for the purpose of MF and SIF investments.

  • This preserves the existing regulatory treatment for InvITs, which combine features of equity and debt.

3. Effective Date

All regulated entities must apply these updated classifications from January 1, 2026, for compliance with investment norms, exposure limits, and portfolio categorisation.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied