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Felix Advisory Innovating financial solutions
Budget 2016-17 – Real Estate Sector
FelixAdvisoryInnova&ngfinancialsolu&ons
Key Changes Ø Changeinsec4on35ADfor
affordablehousingproject,deduc4onshallberestrictedto100%ofcapitalexpenditurew.e.f.1.4.2018(AssessmentYear)Thededuc4onof150%toberemovedandthededuc4onisavailableupto100%ofthecapitalexpenditureforaffordablehousingproject
Ø Nodividenddistribu4ontaxondistribu4onmadebySPVtoREITsandINVITshavingspecifiedshareholding.Inordertora4onalizethetaxa4onregimeforbusinesstrusts(REITsandINVITs)andtheirinvestors,itisproposedtoprovideaspecialdispensa4onandexemp4onfromlevyofdividenddistribu4ontaxondividenddistributedbySPVs
Ø Deduc4oninrespectofprofitandgainsfromhousingprojectundersec4on80-IBANewsec4on80-IBAisinsertedtoprovidefor100%deduc4onoftheprofitsandgainsofanassessee,developingandbuildinghousingprojects,iftheprojectisapprovedbytheCompetentauthorityonfrom01.06.2016andupto31.03.2019,subjecttothecondi4onsspecifiedtherein.Theprojectistobecompletedwithinthreeyears.Further,theprojectshouldbeonaplotoflandmeasuring,notlessthan1000sq.metres,wheretheprojectiswithin25kmfromthemunicipallimitsofDelhi,Mumbai,Chennai&Kolkata(withsizeofunitsnotexceeding30sq.meters)andinanyotherarea,itismeasuringnotlessthan2000sq.metres(thesizeofresiden4alunitnotexceeding60sq.metres)
Addi4onally,thebuiltupareaoftheshopandothercommercialdevelopmentofthehousingproject,shouldnotexceed30%oftotalbuiltuparea
Ø Increaseinperiodofconstruc4onoracquisi4onforhomeloantakenforselfoccupiedhousepropertytofiveyearsfromthreeyearsundersec4on24(b)Toencouragetoobtainownhouseandtodealwiththeprac4caldifficultyofge`ngthehousepropertyconstructedbybuilderorotherswithinthreeyearshavebeendealtwith.Now,the4melimitofacquisi4onorconstruc4onofSelfoccupiedhousepropertyisproposedtoincreasefromthreeyearstofiveyearsforthepurposeofclaiminginterestpaidonborrowedcapitalu/s24(b)
Ø Addi4onaldeduc4ononinterestonloantakenfromfinancialins4tu4ontobuyresiden4alhousepropertyundersec4on80EEAnaddi4onaldeduc4onforthosewhobuyresiden4alhousepropertyforthefirst4me,inrespectofinterestonloantakenfromanyfinancialins4tu4onuptoRs.50,000inproposed.HowevertotalamountofloanshouldnotexceedRs.35lacs,andvalueofhouseshouldnotbemorethanRs50lacs(andloanshouldbesanc4onedbetween01.04.2016and31.03.2017)–theassesseeshouldnothaveanyotherhouseonthedateofsanc4onofloan.Thisdeduc4onisinaddi4ontotheRs.2lacsinterestdeduc4onalreadyavailableundersec4on24(b)
FelixAdvisoryInnova&ngfinancialsolu&ons
Key Changes Ø KrishiKalyanCess,@0.5%onall
taxableservices,w.e.f.1June2016.Proceedswouldbeexclusivelyusedforfinancingini4a4vesforimprovementofagricultureandwelfareoffarmers.Inputtaxcreditofthiscesswillbeavailableforpaymentofthiscess.Toincreasethetaxbasefromservicesectorandtosupportruraleconomyanaddi4onalcess,calledKrishiKalyancess,[email protected]%onalltaxableservices.
Creditforthisaddi4onalcesswouldbeavailabletobepaidforthiscessonly.
Ø Servicetaxexemp4onfor‘AffordableHousinginpartnership’forlowcosthouses
Servicesbywayofconstruc4on,erec4on,commissioning,installa4onoforiginalwork,pertainingtolowcosthousesuptoacarpetareaof60squaremeter,inahousingproject(approvedbythecompetentauthorityunder“AffordableHousinginPartnershp”,componentofPradhanMantriAwasYogna)isexemptfromservicetax
Ø Changeintherateofabatementforservicesofconstruc4onofcomplex,building,civilstructure,orpartthereofforresiden4alunithavingcarpetarealessthan2000squarefeetandcos4nglessthanRs.1croreAtpresent,tworatesofabatementhavebeenprescribedforservicesofconstruc4onofcomplex,buildingetc.(a)75%foramountchargedincaseofaresiden4alunithavingcarpetareaoflessthan2000squarefeetandcos4nglessthanRs1crore,and(b)70%forotherthan(a).Nowauniformrateof70%isbeingprescribedforsuchservices.Therefore,thesmallhousescanhaveupwardimpactonpricesasthedis4nc4onshavebeendoneawaywith
FelixAdvisoryInnova&ngfinancialsolu&ons
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