CA Amar Girishkumar Oza

CA Amar Girishkumar OzaAnalysis of Newly Section 80-IBA (Affordable Housing Scheme / House For All)

After section 80-IB of the Income-tax Act, section 80-IBA shall be inserted with effect from the 1st day of April, 2017. The section was inserted by Finance Act, 2016.

  • Where the gross total income of an assessee includes any profits and gains derived from the business of developing and building housing projects, there shall, subject to the provisions of this section, be allowed, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business.
  • Approval of Project between : 01/06/2016 to 31/03/2019
  • Project Should be Completed within 3 Year of Approval. If approval for more than 1 time than 3 year from first approval.
  • Project was deemed to be Completed when a certificate of completion of project as a whole is obtained in writing from the competent authority.
  Non – Metro Cities Metro Cities*
Location Within the Jurisdiction any Municipality or Cantonment board Within a municipal limit or 25 KMs from Municipal limit
Total Area of Project Not Less than 2000 Square Meter Not Less than 1000 Square Meter
Each Residential Unit Does not Exceed 60 Square Meters Does not Exceed 30 Square Meters
Project utilize % Permissible of Floor Area Ratio Not Less than 80% Not Less than 90%
Built-up Area of Shop or other commercial establishment Does not exceed 3% of aggregate built-up area Does not exceed 3% of aggregate built-up area

*Chennai, Delhi, Kolkata or Mumbai.

  • 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.
  • The Assessee has to maintain separate books of account in respect of housing project.
  • Illustration :
  Project Eligible u/s 80-IBA Other Project Total Income
Gross Total Income 100.00 100.00 200.00
       
Less : Deduction u/s 80-IBA 100.00 0 100.00
       
Net Profit 0 0 100.00

Where the housing project is not completed within the period three year from date of approval, in respect of which a deduction has been claimed and allowed under section 80-IBA, 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 the period for completion so expires.

For Example, Project was approved on 01.07.2016 than the project should be completed on or before 30.06.2019. If not completed before 30.06.2019 than deduction claimed u/s 80-IBA was taxed in FY 2019-20. (In our above example 100.00 deduction taken was taxed.)

It should also be noted that Changes in Service Tax also made as under :

Services by way of construction etc. in respect of-

(i) housing projects under Housing For All (HFA) (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY);

(ii) low cost houses up to a carpet area of 60 square metres in a housing project under “Affordable housing in Partnership” component of PMAY,

(iii) low cost houses up to a carpet area of 60 square metres in a housing project under any housing scheme of the State Government,

are being exempted from Service Tax with effect from 1st March, 2016.

Meaning of Other Terminology :

(a) “built-up area” means the inner measurements of the residential unit at the floor level, including projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units, including any open terrace so shared;

(b) “competent authority” means the authority empowered by the Central Government;

(c) “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;

(d) “housing project” means a project consisting predominantly of dwelling units with such other facilities and amenities as the competent authority may specify subject to the provisions of this section;

(e) “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 and interior door in a shared hallway and not by walking through the living space of another household.’.

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9 responses to “Section 80IBA (Affordable Housing Scheme / House For All)”

  1. Murali S says:

    Sir,

    If land owner by an LLP, which would like to give for JDa could LLP get the benefit of 80-IBA? Else, could LLP transfer the LAND to designated partner and the designated partner give for JDA and get the benefit of 80-IBA.

    Please suggest.
    Thanks and Regards,

  2. Sumit Bhansali says:

    Dear Girishkumar Sir
    Can you please clarify regarding the term ‘muncipalty limits’ in Sec 80-IBA for non metro cities, Does it mean only muncipal coorporation or Muncipal council too validates for such excemption of income generated in a project by a builder.

  3. Gaurav says:

    I have a few queries
    1. Who is the competent authority for assessing sec 80 Iba and availing benefit.
    2. Can the project be a part of a bigger approved project (phase wise assessment of tax)
    3. If there are co-developers what will be the scenario.

  4. CA Prashant Agale says:

    The article is incomplete and factually incorrect. It is not proper to say that Income is tax free. AMT or MAT, as applicable, will still apply. Govt should have exempted the Assessee claiming tax breaks u/s 80IBA from AMT or MAT

  5. Hitesh bhanushali says:

    Could you please write to me if you got any info on competent authority or how to approach it.

    Is MAT applicable on the profits ?

  6. Satya Sai says:

    Prasad

    I have a similar question as Prasad Upadhyay.

    Could you please write to me if you got any info on competent authority or how to approach it.

  7. atul shrirao says:

    sir, if tax benifits under section 80iba is applicable for developers who get in partnership with land owner ?

  8. Hemanth Patwari says:

    Is MAT applicable on the profits ?

  9. Prasad Upadhayay says:

    Hello,

    I just want to know the Competent Authority for Approval.. In our case, our companiy is initiatint a Housing project in Malur, Bangalore. But we dont know to whom we need to approach for approval, so that we can get deduction in respect Section 80-IBA.

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