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MEASURES FOR PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR - DIRECT TAXES

C. - Bill - Memorandum Explaining the Provisions in The Finance Bill, 2017 - Bill - C. - C. MEASURES FOR PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR Incentives for Promoting Investment in immovable property The existing provision of the Act provide for concessional rate of tax and also indexation benefit for taxation of capital gains arising from transfer of long-term capital asset. To qualify for long-term asset, an assessee is required to hold the asset for more than 36 months subject .....

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rdingly, apply in relation to the assessment year 2018-19 and subsequent years. [Clause 3] Rationalisation of Provisions of Section 80-IBA to promote Affordable Housing The existing provisions of section 80-IBA provides for 100% deduction in respect of the profits and gains derived from developing and building certain housing projects subject to specified conditions. The conditions specified, inter alia, include the limit of 30 square meters for the built-up area of residential unit in respect o .....

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;carpet area" as defined in Real Estate (Regulation and Development) Act, 2016 and not the "built-up area". (ii) The restriction of 30 square meters on the size of residential units shall not apply to the place located within a distance of 25 kms from the municipal limits of the Chennai, Delhi, Kolkata or Mumbai. (iii) The condition of period of completion of project for claiming deduction under this section shall be increased from existing three years to five years. These amendme .....

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m of arrangement made by the Government of Andhra Pradesh for formation of new capital city of Amaravati to avoid land-acquisition disputes and lessen the financial burden associated with payment of compensation under that Act. In Land pooling scheme, the compensation in the form of reconstituted plot or land is provided to landowners. However, the existing provisions of the Act do not provide for exemption from tax on transfer of land under the land pooling scheme as well as on transfer of Land .....

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shall not be chargeable to tax under the Act: (i) Transfer of capital asset being land or building or both, under land pooling scheme. (ii) Sale of LPOCs by the said persons received in lieu of land transferred under the scheme. (iii) Sale of reconstituted plot or land by said persons within two years from the end of the financial year in which the possession of such plot or land was handed over to the said persons. This amendment will take effect retrospectively, from 1st April, 2015 and will, .....

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e second financial year after the end of financial year in which the possession of such asset was handed over to the assessee. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years. [Clauses 6 & 25] Special provisions for computation of capital gains in case of joint development agreement Under the existing provisions of section 45, capital gain is chargeable to tax in the year in which transfer takes .....

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s handed over to the developer for development of a project. With a view to minimise the genuine hardship which the owner of land may face in paying capital gains tax in the year of transfer, it is proposed to insert a new sub-section (5A) in section 45 so as to provide that in case of an assessee being individual or Hindu undivided family, who enters into a specified agreement for development of a project, the capital gains shall be chargeable to income-tax as income of the previous year in whi .....

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rovide that benefit of this proposed regime shall not apply to an assessee who transfers his share in the project to any other person on or before the date of issue of said certificate of completion. It is also proposed to provide that in such a situation, the capital gains as determined under general provisions of the Act shall be deemed to be the income of the previous year in which such transfer took place and shall be computed as per provisions of the Act without taking into account this pro .....

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amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years. It is also proposed to insert a new section 194-IC in the Act so as to provide that in case any monetary consideration is payable under the specified agreement, tax at the rate of ten per cent shall be deductible from such payment. This amendment will take effect from 1st April,2017. [Clauses 22, 25 & 64] Shifting base year from 1981 to 2001 for compu .....

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lowed to claim deduction for cost of improvement incurred after 01.04.1981, if any. As the base year for computation of capital gains has become more than three decades old, assessees are facing genuine difficulties in computing the capital gains in respect of a capital asset, especially immovable property acquired before 01.04.1981 due to non-availability of relevant information for computation of fair market value of such asset as on 01.04.1981. In order to revise the base year for computation .....

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effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years. [Clauses 28 & 24] Expanding the scope of long term bonds under 54EC The existing provision of section 54EC provides that capital gain to the extent of ₹ 50 lakhs arising from the transfer of a long-term capital asset shall be exempt if the assessee invests the whole or any part of capital gains in certain specified bonds, within the specified time. Currently, inves .....

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