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Tax sops planned for green rated buildings
January, 18th 2008
The Centre is looking at offering tax sops, including possibly property tax breaks, for developers of energy-efficient buildings, which are to be graded for a greenness certification ranging from one to five stars.

The scope for an incentive scheme involving a set-off mechanism, whereby firms constructing buildings conforming to prescribed standards could take credit for a part of the construction cost against the developers corporate or personal income-tax liability, is also being examined.

According to senior Government officials, a rating mechanism called Griha (Green Rating for Integrated Habitat Assessment), which has been developed by The Energy and Resources Institute (TERI) and the Ministry of New and Renewable Energy Sources based on inputs from the Power Ministrys Energy Conservation Building Code, is in the process of being implemented for new commercial, institutional and large-scale residential buildings.

Awarding points

The system would essentially evaluate the environmental performance of a building over its entire lifecycle by awarding points to new buildings for meeting the design and performance intent of the criteria, with each criterion having points assigned to it.

Griha has a 100-point rating scheme with some core points that are mandatory for compliance, while the rest are optional and can be earned by complying with the respective criterion. Different levels of certification are to be awarded based on the number of points earned, with the minimum points required being 50.

Buildings scoring 50 to 90 points will get between one and four stars, while those scoring 91 to 100 points would get the maximum rating of five stars, making them eligible for maximum sops under the scheme.

The rating of new buildings is slated to be carried out by an evaluation panel comprising professionals, and the system could be extended to existing structures in the second phase. A buildings ability to conserve energy, protect the health of construction workers, pollution prevention and renewable energy utilisation are some of the criteria for ascertaining its energy efficiency. The guidelines could be revised every three years, an official said.

According to International Energy Agencys estimates, almost 40 per cent of the global energy demand was due to buildings for heating, cooling, cooking, lighting, and running appliances and this figure is expected to grow by an additional 45 per cent by the year 2025.

Internationally, voluntary building rating systems have been instrumental in raising awareness and popularising green design. India is witnessing a surge in commercial energy consumption as a result of large investments, particularly in the commercial buildings sector, thereby requiring buildings to be designed appropriately to reduce their own energy bills, as well as reduce the load on the electricity grid.

While property tax breaks have been under consideration for green buildings, the main problem with this proposal is that property tax forms the mainstay of municipal finances, by virtue of coming under the State List in Schedule VII of the Indian Constitution. It would require a bit of deliberation with States on the issue of municipalities being agreeable to forego part of this tax. So other options are also being looked at, including the set-off mechanism, an official said.

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