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Deduction in respect of Profits and Gains from Housing Projects [Section 80-IBA]

  1. 100% Deduction of Profit from Housing Projects [Section 80-IBA(1)]:

  2. Conditions to be Fulfilled [Section 80-IBA(2)]:

  3. Consequences if the Project is Not Completed within a period of 5 years from the date of Approval [Section 80-IBA(4)]:

  4. Deduction under any other Provisions of the Act not allowed if the same is claimed under this section [Section 80-IBA(5)]:

(1) 100% Deduction of Profit from Housing Projects [Section 80-IBA(1)]:

100% of the profit derived from the aforesaid business is deductible under section 80-IBA provided the project fulfils the conditions mentioned in section 80-IBA(2).

However, deduction is not available to any assessee who executes the housing project as a works contract awarded by any person (including the Central/State Government). When deduction is allowed under this section, deduction to the extent of such profit is not available under any provision of the Act. Deduction should be claimed in the return of income (otherwise deduction is not available).

(2) Conditions to be Fulfilled [Section 80-IBA(2)]:

For the purposes of section 80-IBA(1), a housing project shall be a project which fulfils the following conditions, namely:—

  1. The assessee has profits derived from the business of developing and building a housing project (i.e., a project consisting predominantly of residential units with such other facilities and amenities as the competent authority may specify).

  2. The competent authority has approved the project after June 1, 2016, but on or before March 31, 2019.

  3. The assessee completes the project within a period of 5 years from the date of first approval by the competent authority. The project shall be deemed to have been completed when a certificate of completion of project as a whole is obtained in writing from the competent authority.

  4. The carpet area of the shops and other commercial establishments included in the housing project does not exceed 3% of the aggregate carpet area.

  5. Size of the plot, area of residential units and minimum utilization of FAR (floor area ratio) should satisfy the criteria given below –

Location of Project Area of Plot of Land on which Project is situated Carpet Area of Residential Units comprised in the Housing Project Utilisation of Permissible FAR (Floor Area Rario)

Project is located within the cities of Chennai, Delhi, Kolkata or Mumbai

Not less than 1,000 quare metres Not to exceed 30 square metres Not less than 90%
Project is located in any other place Not less than 2,000 quare metres Not to exceed 60 square metres Not less than 80%
  1. 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.

  2. The assessee should maintain separate books of account in respect of the housing project.

(3) Consequences if the Project is Not Completed within a period of 5 years from the date of Approval [Section 80-IBA(4)]:

Where the housing project is not completed within the period specified under section 80-IBA(2)(b) (i.e. 5 years) and in respect of which a deduction has been claimed and allowed under this section, 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.

(4) Deduction under any other Provisions of the Act not allowed if the same is claimed under this section [Section 80-IBA(5)]:

Where any amount of profits and gains derived from the business of developing and building housing projects is claimed and allowed under this section for any assessment year, deduction to the extent of such profit and gains shall not be allowed under any other provisions of this Act.

For the purposes of this Section 80-IBA ,—

  1. “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;

  2. “Competent Authority” means the authority empowered to approve the building plan by or under any law for the time being in force;

  3. “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;

  4. “Housing Project” means a project consisting predominantly of residential units with such other facilities and amenities as the competent authority may approve subject to the provisions of this section;

  5. “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 an interior door in a shared hallway and not by walking through the living space of another household. [Section 80-IBA(6)]

Deductions to be made in Computing Total Income [Sections 80A to 80U (Chapter VIA)]

Related Topics...Deductions from Gross Total Income

  1. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "PAYMENT & INVESTMENT" ARE ALLOWED FROM SECTION 80C TO 80GGC

    Section 80C Section 80CCC Section 80CCD
    Section 80CCG Section 80D Section 80DD
    Section 80DDB Section 80E Section 80EE
    Section 80G Section 80GG Section 80GGA
  2. DEDUCTIONS UNDER 'CHAPTER VI-A' IN RESPECT OF "INCOMES" ARE ALLOWED FROM SECTION 80-IA TO 80U

    Section 80-IA Section 80-IAB Section 80-IAC
    Section 80-IB Section 80-IBA Section 80-IC
    Section 80-ID Section 80-IE Section 80-JJA
    Section 80-JJAA Section 80-LA Section 80-P
    Section 80-PA Section 80-QQB Section 80-RRB
    Section 80-TTA Section 80-TTB Section 80-U
 

 

 
 
 
 
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