DEDUCTION UNDER SECTION 80-IBA FOR AFFORDABLE HOUSING PROJECTS

Sl. No. CRITERIA CONDITIONS
1 Eligible Business The business of developing and building housing projects
2 Amount of Deduction 100% of profits and gains derived from eligible business
3 Period of Deduction 3 consecutive assessment years
4 Commencement of Deductions 3 consecutive Assessment years beginning from the year in which the eligible approval of the competent authority is obtained.
5. Conditions to be fulfilled by the housing projects 1. Approval by competent authority (Local authority empowered to approve building plan) after 1 June 2016 till 31 March 2019 ;

2. Project completion within 3 years from date of approval by competent authority [ As evidenced by Completion Certificate issued by Competent Authority]

3. Built-up area of shops / commercial establishment does not exceed 3% of aggregate built-up area.

4. Project on Land 2000 sq. meters (21528 Sq feet) and only housing project on that Land.

5. Built-up area of housing units does not exceed 60 sq. meters (645 Sq. feet)

6. Only one unit to be allotted from a family – comprising individual, spouse or minor children

7. Project utilized 80% Floor Area Ratio

6 Restrictions Not applicable in respect of an assessee who executes work contract awarded by any person including Central or State Government.
7 Separate Books of Accounts and Audit ü Separate Accounts are required for Eligible Business.

ü Accounts are required to be Audited by a Chartered Accountant.

ü To furnish Audit Report along with Return of Income

8 Related Party Transactions POWER OF ASSESSING OFFICER TO RECOMPUTE PROFITS:

ü Transfer of any goods or services held for the purpose of any other business to the eligible business other than Fair Market Value (FMV).

ü Owing to close connection between the assessee & any other person, the course of business is so arranged that the business between them produces more than ‘ordinary profits.’

9 Penalty If project is not completed within 3 years from date of approval by competent authority, the total amount of deduction claimed u/s 80IBA shall be deemed to be the income for the “financial year” in which the period of completion so expires.
10 Definitions “built-up area” means the inner measurements of a residential unit at the floor level, including projections and balconies, as increased by the thickness of walls, but does not include common areas shared with other residential units, including any open terrace so shared.

“floor area ratio” = total covered area of plinth area on all floors / area of plot of land

residential unit means “independent housing unit with separate facilities for living, cooking, and sanitary requirements, distinctly accessible 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 waling through the living space of another household.

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3 thoughts on “DEDUCTION UNDER SECTION 80-IBA FOR AFFORDABLE HOUSING PROJECTS

  1. Sir,

    You have mentioned that to claim deduction U/s 80IBA seperate books of accounts are to be maintained and they are to be audited by Chartered Accountant.

    Kindly clarify under which section it is provided that it is to be audited by CA. Section 80IBA including all sub sections does not say so.

  2. Query :

    Please clarify on sec 80IBA (2) (b) (i) : If the land has been previously approved as NA with a dummy building Plan with the intention just to convert the status of land from agriculture to NA (non agriculture) from town planning/collectorate office and the commencement certificate has been holded and not been prepared in muncipalty. then, in such case- will the above approval date be considered as deemed approval date or the fresh date on which we obtain a commencement certificate with building plan meeting the requirement of section 80IBA would be considered as first approval.

    • (1) Where the approval in respect of a housing project is obtained more than once, the project shall be deemed to have been approved on the date on which the building plan was first approved by competent authority.

      (2) The project shall be deemed to have been completed when a certificate of commencement of project as a whole is obtained in writing from the competent authority.

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