Budget updates 2019 - CORPORATE & BUSINESS TAXATION

[CS Swati Dodhi]

CORPORATE & BUSINESS TAXATION

1. Deduction in respect of profits and gains from housing projects

Section 80-IBA of the Act provide for a deduction of 100% of profits and gains derived from the business of developing and building housing projects provided that the project is approved by the competent authority after June 1, 2016, but on or before the March 31, 2019. It is now proposed to extend the
benefits for another year i.e. upto March 31, 2020.

This amendment will take effect from April 1, 2020.

2. Other benefits to real estate sector

Provisions of Section 23 of the Act provide that where property nomprising of any building or land appurtenant thereto is held as stock-in-trade and the property is not let during the whole or any part of the previous year, the annual value of such property shall be taken as Nil for the period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority. It is now proposed to extend the period of exemption from levy of tax on notional rent from one to two years.

This amendment will take effect from April 1, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.
 

CAPITAL GAINS
Taxation of long-term capital gains on sale of residential house property;

The clear provisions of Section 54 of the Act provide relief to the seller of a long-term capital asset, being buildings or lands appurtenant thereto and being a residential house, from capital gain tax if the proceeds from the sale are used to acquire or construct one residential house in India.

It is now proposed to increase the benefit of rollover of capital gains from investment in one residential house to two residential houses for a tax payer having capital gains up to RS 20 million.

This option shall also be available to the taxpayer once and cannot be exercised again for the same or any other
assessment year.

This amendment will take effect from April 1, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.