CA Manikanta PSLS
Deduction under 80 IBA updated with Finance Act, 2021 (Affordable housing project Profits deduction under Income Tax Act, 1961)
Introduction:-
The real estate sector plays a important role in fulfilling the need and demand for housing and infrastructure in the country. The growth of this sector is well complemented by the growth in the corporate environment. Construction industry ranks 3rd among the 14 major sectors of the economy. In India, the real estate sector is the second-highest employment generator, after the agriculture sector.
Background:-
In order to encouraging Developers in affordable housing sector government initiate several incentives for developers like subsidies, tax benefits and most importantly, institutional funding was provided. Deduction u/s 80 IBA is the tax benefit provided under Income Tax Act, 1961.
Deduction under section 80 IBA
Housing Projects which are approved between 01.06.2016 to 31.03.2021 by the competent authority and if the below conditions are satisfied. Then 100 % deduction of the profits and gains derived from the business of developing and building housing projects u/s 80 IBA of Income Tax, 1961.
There is a change in provisions of this section w.e.f from 01.09.2019 hence for better understanding conditions to be satisfied shown in below format.
|
S.No |
Project Approved between | |
| From 01.06.2016 to 31.08.2019 | From 01.09.2019 to 31.03.2022 | |
| 1 | Project should be completed within 5 years form date of approval. | Project should be completed within 5 years form date of approval. |
| 2 | Carpet area of shops and other commercial establishments less than 3% of aggregate carpet area. | Carpet area of shops and other commercial establishments less than 3% of aggregate carpet area. |
| 3 | Project is on plot of land not less than.
a) 1000 Sqm ( If project located within the cities of Chennai, Delhi, Kolkata or Mumbai) b) 2000 Sqm (If project in Other places) |
Project is on plot of land not less than.
a) 1000 Sqm ( If project located within the metropolitan cities of Bangalore, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region)) b) 2000 Sqm (If project in Other places) |
| 4 | The project is the only housing project on the plot of land | The project is the only housing project on the plot of land |
| 5 | The carpet area of the residential unit comprised in the housing project does not exceed
a) 30 Sqm (If project located within the cities of Chennai, Delhi, Kolkata or Mumbai) b) 60 Sqm (If project in Other places) |
The carpet area of the residential unit comprised in the housing project does not exceed
a) 60 Sqm (If project 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)) b) 90 Sqm (If project in Other places) |
| 6 | 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. | 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. |
| 7 | the project utilises not less than
a) 90% of the floor area ratio permissible in respect of the plot of land under the rules to be made by the CG/SG/ local authority where the project is located within the cities of Chennai, Delhi, Kolkata or Mumbai, or b) 80% of such floor area ratio where project is located in any other place |
the project utilises not less than
a) 90 % of the floor area ratio permissible in respect of the plot of land under the rules to be made by the CG/SG/ local authority, where such 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); or b) 80% of such floor area ratio where project is located in any other place |
| 8 | The assessee maintains separate books of account in respect of the housing project. | The assessee maintains separate books of account in respect of the housing project. |
| 9 |
NA |
The stamp duty value (value adopted for the purpose of payment of stamp duty) of a residential unit in the housing project does not exceed Rs. 45 Lakhs. |
Points to be noted
1. Where the project approval is obtained more than once, date of first approval shall be considered for this purpose.
2. This section not applies to any assessee who executes the housing project as a works-contract awarded by any person (including the CG or SG).
3. Where the housing project is not completed within 5 years then deduction claimed under this section shall be deemed to be the PGBP income of the assessee in the PY in which the 5 years completed.
4. Deduction to the extent claimed under this section shall not be allowed under any other provisions of this Act.
5. For the purposes of this section carpet area have the same meaning as per RERA Act, 2016
Author Bio
Which form to be upload for claiming deduction under 80IBA for AY 2023-24 as assessee had claimed deduction under 80IAB(1) and return is still not processed.
Thanks
Appreciate your timely response.
if project is residential cum commercial than we will claim only residential units in 80IBA and tax pay on commercial units.
Does the benefit of 80IBA section surpasses the AMT or MAT. Or lets say if i am eligible for exemption of tax under this section for a specific project eligible under 80IBA, then too will i be required to pay AMT or MAT of 18.5% for profits gained from this project. Whereas i am also already paying 30% tax for income from other projects (Non eligible under 80IBA).
Whether there is any extension granted or being considered at the Govt level to complete the project beyond 5 years due to the natural calamity faced by the wold ?
What is the Competent Authority for Approving such Housing Project u/s 80 IBA
The local authority (i.e. Jaipur Development Authority) approves the layout plan and grant the construction permission, the same is to be deposited under rera along with other documents of respective state where project is going to construct. Rera is only for project registration (they don’t approve the layout plans and grant construction permission), initially you have to obtain Local authority approval than register your project under Rera.