Affordable Housing Scheme For Real Estate Projects

GST Rate on Under-Construction Properties Conditions of “Affordable Housing”: A Residential House/Flat of carpet area (Metropolitan Cities- Bengaluru, Chennai, Delhi-NCR, Kolkata, Hyderabad and Mumbai) Up to 60 Sq. meters In Metropoliton Cities Up to 90 Sq. meters In Non-Metropoliton Cities Value Up to Rs.45 lakhs

GST Rate on Under-Construction Properties Particulars Up to 31/03/2019 From 01/04/2019 Residential Units 12% (With ITC) 5% (Without ITC) Affordable Residential Units 8 % 1% Commercial Units

GST Rate on Under-Construction Properties Conditions in case of Mixed Projects: Carpet area of Commercial part not more than 15% out of carpet area of Total Projects, (entire Project treated as Residential) GST Rate Applicability: 1) In Affordable Housing Units - 1% 2) Residential Units - 5% 3) Commercial Units - 5%

Exemption to Services [Notification 12/2017] Services provided by way of pure labour contracts of a civil structure or any other original works pertaining to the beneficiary-led individual house construction or enhancement under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.

Exemption to Services [Notification 12/2017] PMAY (also known as Housing for all) Scheme has four components: Credit Linked Subsidy Scheme Beneficiary-Led Individual Housing Scheme Affordable Housing in Partnership Scheme Slum Rehabilitation Scheme Granting Exemption under this Entry: Government has granted exemption to pure labour contracts If, transactions includes supply of material, then benefit under this entry cannot be claimed

Concession in Rate Available for Affordable Housing

Concession in Rate [Notification 11/2017] This notification prescribes rates of tax on various services. Also prescribes lower rates for certain specified works contract services.

Composite supply of works contract Entry 3(iv) of Notification 11/2017 Supplied made of a road, bridge, tunnel or terminal for road transportation for use by general or public by way of- Construction Erection Commissioning Installation Completion Fitting out Repairs & Maintenance Renovation Alteration

1. Entry 3(iv)(b) of Notification 11/2017 a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awas Yojana

2. Entry 3(iv)(c) of Notification 11/2017 a civil structure or any other original works pertaining to the "ln-site redevelopment of existing slums using land as a resource, under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana (Urban)

3. Entry 3(iv)(d) of Notification 11/2017 a civil structure or any other original works pertaining to the "Beneficiary led individual house construction / enhancement“ under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana

4. Entry 3(iv)(da) of Notification 11/2017 a civil structure or any other original works pertaining to the “Economically Weaker Section (EWS) houses” Constructed under the Affordable Housing in partnership By State or Union territory or local authority or urban development authority under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana

5. Entry 3(iv)(db) of Notification 11/2017 a civil structure or any other original works pertaining to the -Credit Linked Subsidy Scheme for EWS -Lower Income Group (LIG) -Middle Income Group-1 (MlG-1) -Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana

5. Entry 3(iv)(db) of Notification 11/2017 Applicability of Subsidy & Interest Amount of Loan Particulars EWS LIG MIG-1 MIG-2 Annual Income ≤ Rs.3 Lakhs Rs.3 Lakhs To Rs.6 lakhs Rs.6 Lakhs to Rs.12 Lakhs Rs.18 Lakhs Housing Loan Amount Eligible Up to Rs. 6(L) Up to Rs. 9(L) Up to Rs. 12(L) Maximum Loan Tenure 20 Years Carpet Area 30 Sq. Mt. 60 Sq. Mt. 120 Sq. Mt. 150 Sq. Mt. Interest Subsidy 6.5% 4% 3%

Composite supply of works contract Entry 3(v) of Notification 11/2017 Supplied made of railways, including monorail and Metro; and a single residential unit otherwise than as a part of residential complex; by way of- Construction Erection Commissioning Installation Completion Fitting out Repairs & Maintenance Renovation Alteration

6. Entry 3(v)(c) of Notification 11/2017 Low-cost houses up to a C/A of 60 sq. mts. per house project approved by competent authority empowered under the 'Scheme of Affordable Housing in Partnership’ Framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India

7. Entry 3(v)(d) of Notification 11/2017 Low cost houses up to a C/A of 60 sq. mts. per house project approved by the competent authority Under “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana Any Housing Scheme of a State Government

8. Entry 3(v)(da) of Notification 11/2017 Low-cost houses up to a C/A of 60 sq. mts. per house Under Affordable Housing Project which has been given Infrastructure Status

Scheme Benefits Under Section 80-IBA Of Income Tax For Affordable Housing

PROVISIONS OF SECTION 80-IBA Deduction of 100% PROFITS TO HOUSING Projects (Sub-section 1): Section 80-IBA provides for 100% deduction in respect of the profits and gains derived from developing and building housing projects subject to specified conditions. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Conditions: (Sub-section 2): The project must be approved by competent authority after 01-06-2016 but on or before 31-03-2020. The project must be completed within a period of 3 years (5 years w.e.f A. Y. 2018-19) from the date of approval by the competent authority www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Conditions: (Sub-section 2): c. Where the approval in respect of a housing project is obtained more than once, the date of first approval should be taken as the date of approval of the project. d. 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 www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Conditions: (Sub-section 2): e. The shops and other commercial establishments should not exceed 3% of the aggregate carpet area of the project. f. The project is the only housing project on the plot of land. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Conditions: (Sub-section 2): Where an individual is allotted a residential unit in the project, no other unit should be allotted to the – same individual or spouse of the individual or minor children of such individual Separate books of account should be maintained in respect of the housing project. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Conditions: (d, f, h) (Sub-section 2) Particulars Metro Others Location Cities of Chennai, Delhi, Kolkata or Mumbai or within the distance, measured aerially, of twenty-five kms from the municipal limits of these cities Any other place Plot of land measuring not less than (Clause d) 1000 square meters 2000 square meters Carpet area of residential unit should not exceed (Clause f) 30 square meters 60 square meters Project utilisation (Clause h) Not less than 90% of the floor area ratio permissible* in respect of plot of land Not less than 80% of the floor area ratio permissible* in respect of plot of land www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Exclusion (Sub-section 3 ): Any assessee who executes the housing project as a works­ contract awarded by any person (including the Central Government or the State Government) shall not be entitled to claim benefit u/s. 80-IBA. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Non-completion of project within the specified period (Sub-section 4): On failure of completion of project within the period specified under clause (b) of sub-section (2) and in respect of which deduction has been claimed and allowed, the total amount of deduction so claimed and allowed in one or more previous years, shall be deemed to be the income of assessee chargeable under the head "Profit and gains of business or profession" of the previous year in which the period for completion expires. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA No double deduction (Sub-section 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. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Definitions (Sub-section 6): “Carpet area" shall have the same meaning as assigned to it in clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016). Clause (k) of section 2 of the Real Estate (Regulation and Development) Act, 2016: The net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or veranda area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Definitions (Sub-section 6): “Competent authority" means the authority empowered to approve the building plan by or under any law for the time being in force; “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; "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; www.ca-nsa.com

PROVISIONS OF SECTION 80-IBA Definitions (Sub-section 6): “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. www.ca-nsa.com

CASE STUDIES Ownership of land: Whether builder developing a housing project is required to be owner of the land on which housing project is constructed? Will the answer be different if land is owned by a co-operative society? www.ca-nsa.com

CASE STUDIES Completion of the project: There are 7 buildings in a hosing project. The builder could obtain certificate of completion of 5 buildings by the end of period of 5 years from the date of approval of building plan. Whether deduction u/s. 80-IBA would be available? If yes, to what extent? www.ca-nsa.com

CASE STUDIES Only housing project on the plot of land: If a final plot is sub-divided by the builder into two or more sub-plots and puts up a housing project on one Of the sub-plots, whether deduction u/s. 80-IBA would be available? If the sub-plotting of a final plot has been got done by some other person and a builder has purchased a sub-plot out of the final plot, would the answer be different? www.ca-nsa.com

CASE STUDIES Carpet area: There are 100 residential units in a project. Carpet area of 10 units is 65 sq. meters and carpet area of 90 units is 58 sq. meters. Whether deduction u/s. 80-IBA would be available? If yes, to what extent? www.ca-nsa.com

CASE LAWS U/S. 80-IB(10) Ownership of land CIT v. Radhe Developers (2012) 341 ITR 403 (Guj) CIT v. Moon Star Developers (2014) 269 CTR 259 (Guj) CIT v. Shital Corporation (2014) 369 ITR 476 (Guj) CIT v. Keval Construction (2013) 354 ITR 13 (Guj) Land owner is a Co-op. Society CIT v. Swastik Associates (2015) 231 Taxman 893 (Guj) www.ca-nsa.com

CASE LAWS U/S. 80-IB(10) Housing project approved by local authority must be treated as housing project in absence of definition under the Act CIT v. Veena Developers (2015) 277 CTR 297 (SC) Plan approval & completion certificate name of land owner CIT v. Sahajanad Associates (2014) 367 ITR 645 (Guj) www.ca-nsa.com

CASE LAWS U/S. 80-IB(10) B U Permission application within specified time ITO v. Saket Corporation (2015) 234 Taxman 435 (Guj) CIT v. Tarnetar Corporation (2014) 363 ITR 174 (Guj) Partial completion - Completed units are eligible CIT v. B. M. & Brothers (2013) 86 CCH 194 Guj HC Open terrace of Pent house not part of built-up area CIT v. Amaltas Associates (2016) 389 ITR 175 (Guj) www.ca-nsa.com

CASE LAWS U/S. 80-IB(10) Proportionate deduction CIT v. Sanghvi and Doshi Enterprise (20 I3) 255 CTR 156 (Mad) ITO v. Kirti Construction (2014) 41 CCH 305 AhdTrib Brahma Associates v. JCIT (2009) 122 TTJ (Pune) (SB) 433 Dilip Kanaiyalal Tilwani v. ITO (2017) 51 CCH 360 PuneTrib Pr. CIT v. Oceanus Dwellings Pvt. Ltd. (2017) 395 ITR 376 (Karn) www.ca-nsa.com

CASE LAWS U/S. 80-IB(10) Proportionate disallowance for unutilized FCI CIT v. Desai Developers (2015) 232 Tax man 490 (Guj) CIT v. Sahajanad Associates (2014) 367 ITR 645 (Guj) CIT v. Moon star Developers (2014) 269 CTR 259 (Guj) www.ca-nsa.com

REGISTRATION I REPORT TO BE FILED WITH IT AUTHORITIES Section 80-IBA does not prescribe for separate registration and audit of the books of account of a housing project. As such no form is prescribed by CBDT so far. As there is no enabling provision for getting audit report u/s. 80-IBA, it is likely that the same may be covered in Form No. 3CD as has been done in case of ICDS. www.ca-nsa.com

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