Facts of 100% Tax Benefits for Affordable Housing under section 80iba of Income Tax act in Budget 2017

Service tax exemption low-cost housing: In recent budget 2017, Indian Govt. declares some good deal for property developers and builders. These declarations give actual bust in real estate sector is secondary issues. Because after the demonetization in 2016 real estate sector is one of the largest sectors that feel the impact of black money curb. But, the government is giving some really good initiative for actual public and declare 100% tax benefits of affordable housing scheme development. This type of affordable housing projects in India. Get a 100% tax exemption under section 80iba of income tax act. Here, we are seeing quick round about facts and figure of section 80iba of income tax act and how this affects or benefiting affordable housing projects in India.

100% Tax Benefits for Affordable Housing Projects in India.

Larger objective of service tax exemption low-cost housing or affordable home projects is ‘Housing for All’.

There are some conditions and prospects that are expecting to this 100% Tax Benefits for Affordable Housing Scheme to follow, let’s check it.

Clause 43 of the Finance Bill:

Clause 43 of the Bill seeks to insert a new section 80 iba of income tax act relating to deductions in respect of profits and gains from the affordable housing project. The proposed new section 80 iba of income tax act seeks to provide for hundred per cent. Deduction of the profits and gains of a builder or developer is developing and building low-cost housing project. If the project is approved by the competent authority on or before the 31st March 2019 subject to the conditions specified therein. The builder or developer is required to complete the said project within three years failing which the entire deduction claimed in previous years shall be deemed as his income.

This amendment will take effect from 1st April 2017 and will, accordingly, apply in relation assessment year 2017-2018 and subsequent years.

Rules and Regulations for 100% Tax Benefits for Affordable Housing Scheme:

Here listed facts are expecting for low-cost housing development promotion under total free tax benefits. No official words come on it, but for final, we need to wait until April 2017.

• The project is completed within a period of three years from the date of approval.
• The project is on a plot of land measuring not less than 1000 sq. meters. Where the project is within 25 km from the municipal limits of four metros namely Delhi, Mumbai, Chennai & Kolkata.
• And in any other area, it is measuring not less than 2000 sq. meters.
• The size of the residential unit in the said areas is not more than thirty sq.meters and sixty sq.meters, respectively.
• The residential unit is allotted to only an individual, no such unit shall be allotted to him or any member of his family, etc.

Section 80 iba of Income Tax:

1.

Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building housing projects, there shall, subject to the provisions of this section, be allowed, a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business.

2.

For the purposes of sub-section (1), a housing project shall be a project which fulfills the following conditions, namely:

(a) The project is approved by the competent authority after the 1st day of June 2016, but on or before the 31st day of March 2019, in accordance with such guidelines as may be prescribed.

(b) The project is completed within a period of three years from the date of approval by the competent authority: Provided that,

• (i)  Where the approval in respect of a housing project is obtained more than once, the project shall be deemed to have been approved on the date on which the project was first approved by the competent authority.
• (ii) The project shall be deemed to have been completed when a certificate of completion of the project as a whole is obtained in writing from the competent authority.

(c)  The built-up area of the shops and other commercial establishments included in the housing project does not exceed three per cent. of the aggregate built-up area.

(d)  The project is on a plot of land measuring not less than one thousand square meters where such project is located within the cities of Chennai, Delhi, Kolkata or Mumbai or within the area of twenty-five kilometers from the municipal limits of these cities, or two thousand square meters. Within the jurisdiction of any other municipality or cantonment board.

(e)  The residential units comprised in the housing project does not exceed thirty square meters where such project is located within the cities of Chennai, Delhi, Kolkata or Mumbai or within the area of twenty-five kilometers from the municipal limits of these cities, or sixty square meters, where such project is located within the jurisdiction of any other municipality or cantonment board.

(f) Where a residential unit in the housing project is allotted to an individual, no other residential unit in the housing project shall be allotted to the individual or the spouse or the minor children of such individual.

(g) The 100% tax benefits for affordable housing project utilities:

• (i)  Not less than ninety per cent. of the floor area ratio permissible in respect of the plot of land under the rules to be made by the Central Government or the State Government or the local authority, as the case may be, where the project is located in the cities of Chennai, Delhi, Kolkata or Mumbai or within the area of twenty-five kilometers from the municipal limits of these cities, or
• (ii) Not less than eighty per cent. of such floor area ratio where such project is located in any area other than the areas referred to in sub-clause (i); and

(h) The assessee maintains separate books of account in respect of the housing project.

3.

Nothing contained in this section shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central Government or the State Government).

4.

Where the housing project is not completed within the period specified under clause (b) of sub-section (2) and in respect of which a deduction has been claimed and allowed under this section, the total amount of deduction so claimed and allowed in one or more previous years, shall be deemed to be the income of the assessee chargeable under the head “Profits and gains of business or profession” of the previous year in which the period for completion so expires.

5.

Where any amount of profits and gains derived from the business of developing and building housing projects under any scheme for the housing is claimed and allowed under this section for any assessment year, deduction to the extent of such profit and gains shall not be allowed under any other provisions of this Act.

6.

For the purposes of 80 iba of income tax act section:

“Built-up area” means the inner measurements of the residential unit at the floor level, including projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units, including any open terrace so shared.

“Competent authority” means the authority empowered by the Central Government.

“Floor area ratio” means the quotient obtained by dividing the total covered area of plinth area on all the floors by the area of the plot of land.

“Housing project” means a project consisting predominantly of dwelling units with such other facilities and amenities as the competent authority may specify subject to the provisions of this section.

“Residential unit” means an independent housing unit with separate facilities for living, cooking and sanitary requirements, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through and interior door in a shared hallway and not by walking through the living space of another household.’

Know more about Housing Developments:

• Affordable Housing.
• House Hunting Websites in India.
• 2 Bedroom Apartments Guide.
• TDS: A Tax Deducted at Source Guide For Property Buyers.

So, this is all about 80 iba of income tax act and their 100% Tax Benefits for Affordable Housing projects developments. Let’s hope, house for everyone will success and provide shelter for all Indians. How builders and developers of developing countries take this initiative of government positively and go ahead with them. Only time will tell how many people get their home in actual.