Extending time limit for approval of affordable housing project for availing deduction under section 80-IBA of the Act extended to 31st March, 2021.

The existing provisions of section 80-IBA of the Act, inter alia, provide that where the gross total income of an assessee includes any profits and gains derived from the business of developing and building affordable housing projects, there shall, subject to certain conditions specified therein, be allowed a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business. The conditions contained in the section, inter alia, prescribe that the project is approved by the competent authority during the period from 1st June, 2016 to 31st March, 2020.

In order to incentivise building affordable housing to boost the supply of such houses, the period of approval of the project by the competent authority is proposed to be extended to 31st March, 2021.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

[Clause 38]

Extract of Relevant Clauses of Finance Bill 2020

Clause 38

“Clause 38 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 projects.

The provisions of sub-section (1) of the said section provide for hundred per cent. deduction of the profits and gains derived from the business of developing and building affordable housing projects subject to certain conditions. Further, the provisions of clause (a) of sub-section (2) of the said section provide that the housing project shall be approved by the competent authority after the 1st day of June, 2016 but on or before the 31st day of March, 2020.

It is proposed to amend clause (a) of said sub-section (2) so as to allow the deduction in respect of profits and gains derived from the business of developing and building affordable housing projects for hundred per cent. of the profits and gains derived from the business of developing and building such projects approved by the competent authority after the 1st day of June, 2016 but on or before the 31st day of March, 2021.

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.”

Extract of Relevant Amendment Proposed by Finance Bill, 2020

38. Amendment of section 80-IBA.

In section 80-IBA of the Income-tax Act, in sub-section (2), in clause (a), for the figures “2020”, the figures “2021” shall be substituted with effect from the 1st day of April, 2021.

Source- Finance Bill 2020 / Union Budget 2020-21

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