Section 80-IBA of Income Tax Act extended: The Narendra Modi-led NDA government at the Centre on Friday extended the period of exemption from levy of tax on notional rent, on unsold inventories that come under Section 80-IBA of the Income Tax Act, to 2 years from 1 year. Finance Minister Piyush Goyal’s proposal to exempt levy of income tax on notional rent on a second self-occupied house is applicable to the housing projects approved till 31st March, 2020.
Section 80-IBA (Affordable Housing Scheme / House For All), inserted by Finance Act, 2016, had been effective from April 1, 2017. The says, if an assessee’s gross total income includes any profits and gains derived from the business of developing and building housing projects, a deduction of an amount equal to 100 per cent of the profits and gains derived from such business will be made.
However, the Finance Act, 2017, made amendments in section 80-IBA to relax some of the conditions required to be fulfilled for grant of deduction. In 2018, the new rule allowed to extend the period within which housing project is to be completed to five years from the date of approval.
The move will make more homes available under affordable housing scheme and give a push to the crumbling real estate sector. The govt decision expected to assuage the plight of the middle class who were facing difficulty to maintain families at two locations on account of their job, children’s education, care of parents because the law makes it mandatory to pay income tax on notional rent if one has more than one self-occupied house.