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sec 80 IB (10)

narendra khandelwal (service) (204 Points)

21 June 2008

can some one help me regarding my queries relating to housing project

my queries are

1. individual banglows constructed in a housing project.each house total area is 10000 sq ft and built up area is 860 sq ft.can tax benefit under section 80 IB be availed?

2. a multi purpose hall in which gym,resports equipment swimming pool facility are provided; measuring 6000 sq ft constructed in above project to be used only for the owners of houses. is it amount to commercial construction?

3. if in the case of few houses, built up area is more than specified limit; can proportionate exemption be availed?

4.is there is any service tax liability on developer

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Rishubh Mathur (Analyst -Taxation) (442 Points)
Replied 21 June 2008

As per sec 80 IB , an undertaking engaged in developing and building housing projects shall be eligible to claim deduction subject to following :

1. The size of plot of land should be minimum of 01 acres

2. Such project should be approved by relevant authorities

and

such project should be developed & constructed within the period of 4years from date of its approval or April 1, 2008 , whichever is later.

3. The built up area of shops & other commercial establishments included in the housing project shall not exceed 5% of the aggregate built-up area or 2000 sq feet, whichever is less.

4. Maximum built up area of each of residential units shuold be as given below:

a) within 25 Kms from the local limits of 1,000 sq feet

the cities of Delhi & Mumbai

b) At any other place : 1,500 sq feet

Now to answer your queries :

1. You may convert the area of the residential units in given terms to assess if the project complies with the relevant provisions.

2. Since the said hall is not to be used for commercial purposes (it implies there are no usage charges & restrictions on use - owners only), it doesn't violate requirements of section.

3. Section 80-IB speaks clearly that EACH residential area should be subject to the maximum limit (refer point 4 above for the limits), you cannot avail the benefits on proportionate basis, unless such units (which have built up area in excess of limits) are in seperate housing project.