AFFORDABLE HOUSING SCHEME UNDER SECTION 80IBA
By Inserting section 80IBA in the Income Tax Act, Government has announced 100% deductions can be claimed out of the profits and gains derived from the construction of Business. The purpose of inserting this section is to make the purchase of affordable houses and give tax incentives to Real Estate Developers.
Let us see what are the conditions under this section to be followed :
NOTE: The approval in respect of a housing project is obtained more than once, the date of first approval should be taken as the date of approval of the project.
Conditions prescribed with respect to the project size and residential unit:
IF THE PROJECT IS APPROVED PRIOR TO 1st SEP,2019 | |||
Location of the project | Area of plot of land on which project is situated | Carpet area of the residential unit | Project Utilization of Floor area ratio |
Where project is located within cities of Chennai, Delhi, Kolkata or Mumbai | Not less than 1,000 square metres | Not to exceed 30 square metres | Not less than 90% permissible under rules made by Government or local authority |
Where the project is located in any other place | Not less than 2,000 square metres | Not to exceed 60 square metres | Not less than 80% permissible under rules made by Government or local authority |
IF THE PROJECT IS APPROVED AFTER 1st SEP,2020 | |||
Where project is located within the metropolitan cities of Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region | Not less than 1,000 square metres | Not to exceed 60 square metres | Not less than 90% permissible under rules made by Government or local authority |
Where the project is located in any other place | Not less than 2,000 square metres | Not to exceed 90 square metres | Not less than 80% permissible under rules made by Government or local authority |
In case where the housing project is not completed within the period specified, the total amount of deduction so claimed and allowed in one or more previous years, shall be chargeable to Tax under the head “Profits and Gains of Business or Profession” for the previous year in which for completion so expires.
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