Deduction under Section 80-IBA to promote Affordable Housing w.e.f AY 2018-19

By | February 23, 2018
(Last Updated On: February 23, 2018)

CBDT CIRCULAR NO.2/2018 [F.NO.370142/15/2017-TPL]DATED 15-2-2018

41. Rationalisation of Provisions of Section 80-IBA to promote Affordable Housing.

41.1 Section 80-IBA of the Income-tax Act provide for 100% deduction in respect of the profits and gains derived from developing and building certain housing projects subject to specified conditions. Before amendment by the Act, the conditions specified included inter alia the limit of 30 square meters for the built-up area of residential unit in respect of project located in the Chennai, Delhi, Kolkata and Mumbai or within 25 kms from the municipal limits of these four cities. Further, it was also provided that in order to be eligible to claim deductions, the project shall be completed within a period of three years.

41.2 In order to promote the development of affordable housing sector, section 80-IBA has been amended so as to provide the following relaxations:

(i)The size of residential unit shall be measured by taking into account the “carpet area” as defined in Real Estate (Regulation and Development) Act, 2016 and not the “built-up area”.
(ii)The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distance of 25 kms from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai.
(iii)The condition of period of completion of project for claiming deduction under this section shall be increased from three years to five years.

41.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly, apply from assessment year 2018-19 and subsequent years.

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