Deduction for Profits from Housing Projects [Section 80-IBA]
- Assessees deriving profits from developing and building housing projects or notified rental housing projects are eligible for deduction.
- Deduction is 100% of profits and gains from such business.
- No deduction allowed if the housing project is executed as a works contract awarded by any person, including the Government.
- Time Limit for Approval and Completion:
Project approved between 01-06-2016 and 31-03-2022.
Project to be completed within 5 years from the approval date.
In cases of multiple approvals, it shall be considered approved on the date when the building plan was initially approved.
The project shall be deemed to be completed on the date the certificate of completion of the project is obtained.
- Area of project and residential units: the total area of the plot of land and the carpet area of the residential units does not exceed:
Location of residential units is Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region) – 1000 sq. meters for area of land, 60 sq. meters for carpet area of residential unit;
For other locations – 2000 sq. meters for the area of land, 90 sq. meters for the carpet area of the residential unit.
- The carpet area of the shops/commercial space doesn’t exceed 3% of the aggregate carpet area.
- Utilisation of land – The Project must utilise a specified minimum percentage of the floor area ratio (FAR) as per the rules made by the Government or local authority.
FAR = Total covered area of plinth area on all the floors / Area of the plot of land
Specified percentage in this behalf is as follows:
Where location is Bengaluru, Chennai, Delhi National Capital Region (limited to Delhi, Noida, Greater Noida, Ghaziabad, Gurugram, Faridabad), Hyderabad, Kolkata and Mumbai (whole of Mumbai Metropolitan Region) – % of floor area ratio not less than 90%;
For other locations – % of floor area ratio not less than 80%.
- Stamp duty value of the residential unit in such project does not exceed Rs. 45 lakhs if approved on or after 01-09-2019.
- Where an individual has been allotted a residential unit in the housing project, no other residential unit in that project shall be allotted to him or his spouse or his minor children.
- The assessee shall maintain separate books of accounts in respect of such housing project.
- Deduction must be claimed in return of income filed on or before the due date.
- Where an assessee fails to complete the project within 5 years from the approval date, prior deductions become taxable as business income in the year the completion period expires.
- Deduction claimed once in any previous year cannot be claimed again in another year.
Deduction for Profits from Undertakings in North-Eastern States [Section 80-IE]
- Any undertaking deriving profits from an eligible business or from the manufacture/production of eligible articles or things in North-Eastern States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura) can claim a deduction underSection 80-IE.
- Eligible Businesses:
Service Sector:
o Hotels (minimum two-star category);
o Adventure and leisure sports (including ropeways);
o Medical and health services (nursing homes with at least 25 beds);
o Running an old-age home;
o Operating vocational training institutes for hotel management, catering and food craft, entrepreneurship development, nursing and para-medical, civil aviation-related training, fashion designing and industrial training.;
o Running an IT-related training centre;
o Manufacturing of IT hardware;
o Biotechnology.
Manufacturing Sector: Manufacture/production of eligible articles or things, excluding:
o Tobacco and manufactured tobacco substitutes (Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985);
o Pan masala (Chapter 21 of the First Schedule to the Central Excise Tariff Act, 1985);
o Plastic carry bags < 20 microns (Notification No. S.O. 705(E), dated 02-09-1999 and S.O. 698(E), dated the 17-06-2003);
o Petroleum oil or gas refinery products (Chapter 27 of the First Schedule to the Central Excise Tariff Act, 1985).
- Eligible if operations begin or a substantial expansion is achieved between 01-04-2007 and 01-04-2017.
- Deduction is allowed equal to 100% of profits and gains for 10 years starting from the year operations commence or the substantial expansion is completed.
- Deduction computed assuming the eligible business is the sole source of income.
- No deduction if the total period of deduction underSection 80-IEor the second proviso to Section 80-IB(4) or Section 80-IC or Section 10C, as the case may be, exceeds 10 assessment years.
- Deduction claim under this section requires books of account audited by a Chartered Accountant. Audit report to be furnished electronically inForm 10CCBone month before the due date of furnishing the return of income under section 139(1).
- Profit must not exceed reasonably expected; AO may recompute income.
- Transfer pricing norms apply to specified domestic transactions.
- Return of income must be filed within the due date underSection 139(1)to claim a deduction.
- Deduction cannot be claimed under any other provision of Chapter VI-A,Section 10A,Section 10AA, Section 10B or Section 10BA. Further, the deduction amount shall not exceed the profits and gains of the eligible business.
- If the undertaking is transferred in the scheme of amalgamation or demerger, the amalgamated or the resulting company is allowed a deduction for the remaining period as if no transfer occurred.
- The undertaking must not be formed by splitting up or reconstructing an existing business, except for re-establishment/revival underSection 33B.
- Such an undertaking must not be formed by the transfer of previously used plant/machinery, except if used outside India before installation and imported (with certain conditions). The condition is deemed fulfilled if the second-hand plant/machinery value does not exceed 20% of the total value.