Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: TDS :: articles on VAT and GST in India :: due date for vat payment :: empanelment :: Central Excise rule to resale the machines to a new company :: list of goods taxed at 4% :: cpt :: ACCOUNTING STANDARDS
« News Headlines »
 Draft Rules for prescribing the method of valuation of fair market value in respect of the trust or the institution-Chapter XII-EB of the Income-tax Act, 1961- reg.
 India is moving towards a flawed GST
 ICAI to organise two-day international conference in Hyderabad
 Here's how to calculate tax payable on your capital gains
 Income Tax calculations for the financial year 2016-17
 CPE Events 17 October - 22 October 2016
 High Court raps I-T Department for wrong tax demand
  CBDT signs 5 advance pricing pacts with Indian taxpayers
 Finance ministry warns tax officials of action against GST protest
 Big changes for small units under GST
 Parliament’s winter session to begin on November 16 to expedite GST rollout

Revisit realty sector exemptions: I-T Dept
February, 15th 2008
The Income Tax Department has sought re-examination of several exemptions provided to the real estate sector.
According to the Budget proposals of the Central Board of Direct Taxes (CBDT), the department is of the view that builders are seeking bulk deductions through shady industrial undertakings.
These exemptions under Sections 80I, 80IA, 80IB and 80IAB deal with deduction from total income from an industrial undertaking. Under Section 80IB, deductions from profits are allowed only if the undertaking is located in industrially backward districts.
However, it had been observed that the deductions were claimed even if the manufacturing activity was carried out only partly in backward areas and a major portion of the facility was based in city limits, said an official source.
Similarly, under Section 80IB(10), deduction on construction of housing projects is available if the total commercial content in the housing project does not exceed 5 per cent of the aggregate built-up area or 200 sq feet, whichever is less.
However, deduction is being claimed by some builders, who are selling commercial plots above the stipulated limit but by entering into more than one agreement with one person and showing it as sale of two properties.
Section 80IA provides for deduction on expenses on those private sector projects where the builders invest in the development of infrastructure, and not for builders who merely undertake the civil construction or any other work contracts.
However, there is confusion since various appellate authorities have held that the deductions are available in respect of undertakings which only develop and do not operate and maintain the infrastructure facility.
The department has also sought an amendment to abolish the project completion method for accounting of the income of builders for taxation purposes.
Sources explained that under the project completion method, income is assessed only when a real estate project gets completed, which usually spans over a number of years. In reality, these builders receive advance for booking which is never returned.
Regarding the valuation of the property, the department has sought an amendment that in cases where the assessee differs on the value assessed by the stamp valuation authority and the matter has been referred to the valuation officer, then higher of the value of the stamp valuation authority and the valuation officer will be taken as the full value of consideration of the property.
This could be done with an amendment to Section 50C. Similarly, when big companies or financial institutions float real estate ventures, they loan the builders or employees for procuring property.
Interest payable by such assessees is deductible under Section 24 of the Income Tax Act . However, later when interest payable is waived by the bank or the institution, the benefits that accrue to the assessees cannot be taxed.
On the other hand, the assessee has already availed the deduction of the interest paid on such loans. Therefore, an amendment could be inserted in the Section 24 (B) of the Income Tax Act to empower the department to tax the cessation of liability.
Similarly, lease rental income earned from putting the property on rent should not be shown as business income, but income from other sources. This is because huge income from property lease is used to set off expenses from other activities, which are unrelated to real estate.
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions