Friday, August 10, 2012

EXTEND TAX HOLIDAY

A NEEDED STEP TO MAKE HOUSING A REALISTIC PROPOSITION

In order to support developers’ efforts of promoting LIG/MIG housing projects, there is an immediate need for a tax holiday under section 80-IB (10) to make LIG/MIG housing a more realistic proposition. For the same, the cut-off date for eligibility should be further extended and tax holiday eligibility, based on project completion condition, should be restored. Even the tax holiday benefit under section 80-IA (4) (iii) is only for industrial parks notified up to March 31, 2011. We suggest that the time limit for notification of industrial parks under the New Industrial Park Scheme 2008 should be extended up to March 2015 as during the slowdown in 2008–2009, there were certain delays in the execution of the projects.

Integrated townships projects should be given incentives at par with infrastructure and single window clearance mechanism should be introduced for such integrated townships to ensure efficient execution. Integrated township projects deserve infrastructure status since while developing integrated townships, developers also develop the infrastructure comprising of roads, lighting, water drainage systems, et al, in and around the township.

Measures such as tax incentives should also be extended to developers who take initiatives for improving social infrastructure through Slum Redevelopment Projects/ Dilapidated Housing / Social Housing. Growth in commercial space during 2007 and 2008 was driven primarily by IT and ITeS sectors. But following the slowdown over the last two years, IT spending, particularly in the BFSI sector, has been hit. Therefore the minimum tenant requirement should be reduced to 10 units. Also, the time limit for notification of industrial parks under the New Industrial Park Scheme 2008 should be extended up to March 2015 and benefits under section 80-IA should be extended to developers.

Further, section 56(2) – section 56(2) of the Act should not be made applicable to the transfer of immovable property. In addition to the existing deduction of up to Rs.100,000, a separate limit up to Rs.200,000 deduction should be permitted for repayment of principal portion of housing loan for self occupied residential property.

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