The existing provision of the section 80-IBA of the Act provides that where the gross total income of an assessee includes any profits and gains derived from the business of developing and building affordable housing project, there shall, subject to certain conditions specified therein, be allowed a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business. One of the conditions is that the project is approved by the competent authority after the 1st day of June 2016 but on or before the 31st day of March 2021.

To help migrant labourers and to promote affordable rental, it is proposed to allow deduction under section 80-IBA of the Act also to such rental housing project which is notified by the Central Government in the Official Gazette and fulfils such conditions as specified in the said notification.

Further, it is also proposed that the outer time limit for 31st March 2021 in this section for getting the affordable housing project approved be extended to 31st March 2022 and same outer time limit be also provided for the proposed affordable rental housing project.

This amendment will take effect from 1st April, 2022 and will accordingly apply to the assessment year 2022-23 and subsequent assessment years.

[clause 26]

Text of the Relevant Clause of the Finance Bill 2021

Clause 26 of the Bill seeks to amend section 80-IBA of the Income-tax Act relating to deductions in respect of profits and gains from housing project.

The provisions of sub-section (1) of the said section provides for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable housing project subject to certain conditions. Further the provisions of clause (a) of sub-section (2) of said section provide that the housing project shall be approved by the competent authority after 1st June, 2016 but on or before 31st March, 2021.

It is proposed to insert sub-section (1A) in the said section so as to provide for hundred per cent. deductions of the profits and gains derived from the business of developing and building affordable rental housing project.

It is further proposed to amend clause (a) of sub-section (2) so as to allow the deduction in respect of profits and gains derived from the business of developing and building housing project for hundred per cent. of the profits and gains derived from the business of developing and building such project approved by the competent authority after 1st day of June, 2016 but on or before 31st March, 2022.

It is also proposed to insert a new clause (da) in sub-clause (6) to define the expression “rental housing project”.

These amendments will take effect from 1st April, 2022 and will, accordingly, apply in relation to the assessment year 2022-2023 and subsequent assessment years.

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