This article will cover in depth details of conditions to be satisfied before availing deduction under section 80-IBA, also details of measurement of plot of land and residential units, carpet area and Utilization of Floor area ratio.

section 80IBADeduction of 100% profits to Affordable Housing Projects

Who can claim deduction under section 80-IBA?

Any assessee (may be an individual, HUF, AOP, BOI, firm, company or any other person) can claim deduction under this section.

Profits from Housing Projects

Eligibility conditions for getting deductions under section 80-IBA:

(1) The assessee has derived profit from the business of developing and building a housing project. (i.e. a project consisting predominantly of residential unit with such other facilities and amenities as the competent authority may specify)

“Housing project” means a project consisting predominantly of residential units with such other facilities and amenities as the competent authority may approve 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 an interior door in a shared hallway and not by walking through the living space of another household.

(2) The project is approved by the competent authority after 01-06-2016 but on or before 31- 03-2020.

Please note that where 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.

(3) The project must be completed within a period of five years from the date of approval by the competent authority

The project will be deemed to be completed where certificate of completion in obtained from competent authority in writing.

(4) The carpet area of the shops and other commercial establishments included in housing project cannot exceed 3% of aggregate carpet area

(5) 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.

(6) The assessee maintains separate books of accounts in respect of the housing project.

♦ Where the assessee executes a housing project as a works contract awarded by any person (including the Central or the State Government), deduction under this section can’t be claimed by him.

♦ Where a housing project is not completed within the time period as mentioned above 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 period for completion so expires.

♦ Where deduction under this section is claimed and allowed in respect of profit from a housing project no deduction shall be allowed in respect of such profit under any other provisions of the Act.

Measurement of plot of land and residential units under section 80-IBA

If Project is Approved Prior to 1st September, 2019

Location of 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 Project is Approved On or After to 1st September, 2019

Location of 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 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

Note: The stamp duty value of a residential unit in the housing project does not exceed forty-five lakh rupees (This condition is applicable only if the housing project is approved on or after 1st September, 2019)

“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.

(Republished with Amendments)

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2 Comments

  1. Vipul SHah says:

    This is not an article. It is reproduction of the provisions of the act. Please refrain from publishing so called “articles”

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