Property Plus
Coimbatore
Revising norms for tax benefits
Section 80 IA of I-T Act exempts income from infrastructure projects from the income tax ambit for 10 consecutive years. Currently, Section 80IB (10) of I-T Act exempts 100 per cent income from housing projects from income-tax, provided the project is approved before March 2007, and completed within four years from the last day of the financial year in which it is sanctioned. The issue now is whether this concession will be extended in the present budget or not. In the eve
nt the concession is extended, the norms need revision in favour of smaller builders and builders who cater to middle and low income groups. The existing norms state that tax concessions would be extended to projects on a minimum plot area of one acre and the maximum built up area of each residential unit should not be more than 1500 sft. excluding undivided share in common areas.
At current prices such residential units would cost between Rs. 70 lakhs to 180 lakhs depending on the locality.
This incentive has so far been in favour of promoters catering to high income segment. This needs to be reformed to accommodate flats up to 800 sft and below. The minimum extent of land prescribed as one acre should also be amended to help the small builders.
The norms could also look into time period for completion. This needs to be revised in relation to the magnitude of the project. It may be a useful idea to impose a condition that at least 50 per cent of the buyers certify that the flats are executed and handed over to them in compliance with the terms of agreement and rules. The definition of built up area given in the Act should also follow a standard method of measurement as envisaged by the Bureau of Indian Standards. This will also help avoid disputes between the developer and the buyers.
C.H. GOPINATHA RAO
(The author is former National President, Institution of Valuers)
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