10 Feb Affordable Housing in India
The following are the points related to affordable housing as per the recent announcement from the Government.
• Register and convert the project as Affordable Housing for Infrastructure status.
• Due to Infrastructure status there is an easy access to private and foreign capital for the developer at a much lower rate (from 18 – 24% to apprx 12%)with longer amortization period.
• Infrastructure status will allow developers access to viability gap funding & tax incentives.
• Time of completion of such project extended from 3 to 5 years.
• Buyers of affordable housing will get interest subvention of 4% on loans upto 9 lakh & 3% on loans upto 12 lakh.and NHB(National Housing Bank) will refinance individual housing loans of about 200 billion rupees.
• Tax break for 1 year after the receipt of completion certificate for unsold stock, allowing developers more time to sell their inventory.
• In case of JV Developments, point of capital gains taxation will be project completion.
• As per 80-IBA, 100% of profits derived from the business of developing and building an affordable housing project included in the gross total income of the assessee shall be allowed as deduction on the following conditions ,
1. The project has to be approved from the competent authority after 1st June’2016 but on or before 31st March’2019.
2. The project has to be completed within a period of 5 years from the date of approval with completion certificate as a whole from competent authority (authority empowered by central Government). If the project is approved more than once, then the 1st approval date shall deemed to be the date of approval. If the project is not completed in 5 years then the entire deduction claimed in previous years shall be deemed as an income.
3. If the project is within the 4 metro cities or within 25kms from the municipal limits from these cities (metro project) then the plot area should not be less than 1000sq.m. and if the project is located within the jurisdiction of any other municipality or cantonment board(non metro project) then the size of the plot should not be less than 2000 sq.m.
4. The carpet area of the residential units shall not exceed 30 sq.m. for metro project and 60 sq.m. for non metro project.
5. The built up area of the shops and other commercial establishments in the housing project hall not exceed 3% of the aggregate built up area.
6. If the residential unit is allotted to an individual, no further residential unit shall be allotted to such individual, his spouse or children.
7. The project should necessarily utilize not less than 90% of the permissible FAR in a metro project and not less than 80% of the permissible FAR in non metro project.
8. The assessee maintains separate book of accounts for the housing project.
• Tax breather of 1 year for notional rent income on unsold unoccupied completed projects.
• Holding period for immovable assets reduced from 3 to 2 years and indexation shifted from 1.04.1981 to 1.04.2001.