Affordable Housing Scheme under Section 80IAB

Last Updated On: Aug. 29, 2020, 8:47 p.m.
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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 :

  • Any Assessee it may be an individual, HUF, AOP, BOI, firm, company or any person can claim deduction under this section if the assessee has derived profit from the developing and building a housing project.
  • The project is approved by the competent authority after 1/6/2016 but on or before 31/3/2020.

        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.

  • The project must be completed within a period of 5 years from the date of approval of the authority. The project will be deemed to be completed where the certificate of completion is obtained from the competent authority in writing.
  • The carpet area of the shops and other commercial establishments included in the housing project cannot exceed 3% of the aggregate carpet area.
  • 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 individuals.
  • The assessee maintains separate books of accounts in respect of the housing 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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