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The real estate industry has requested the Government to extend the computation period for availing itself of income tax benefits by one more year. This period is going to end on March 31, 2013.
The industry’s apex body National Real Estate Development Council (Naredco) has written a letter to Prime Minister Manmohan Singh. The real estate industry gets benefit under Section 80-IB (10) of the Income Tax Act 1961. This is a sunset clause where extension was given in 2010-11 keeping global recession in mind.
According to the revised provision, a developer will be eligible for 100 per cent deduction in respect of profit from those housing projects where approval from a local authority has been obtained between April 1 2005 and March 31, 2008.
The developers were given five years to complete the projects. It means that this benefit will be given only if a project is completed on or before March 31, 2013.
However, Naredco President Navin Raheja, in his letter to the Prime Minister, appealed to extend the completion period of projects sanctioned on or after April 2005 from five years to six years. He felt that the deadline of March 31, 2013 specified for completion of projects, to qualify for concessions entitled under said the Act, would be difficult to realise due to reasons beyond their control.
Raheja said that the liquidity crunch, high cost of funds, high mortgage interest rates, followed by further slowdown in economy after 2010 and high inflation have impacted demand as well as supply. Availability of labour has gone down drastically due to MGNREGA, impacting progress of ongoing projects, he said.
“Increase in cost of construction materials primarily cement and steel and labour have jacked up the prices. The Punjab and Haryana High Court decision to ban use of underground water for construction in Gurgaon and Haryana Government’s inability to supply piped water have slowed down construction,” he said.
Affordable housing
Earlier in its national convention, the industry body also pitched for making affordable housing a priority in urban planning. The theme of the two-day convention was sustainable housing for masses. It was inaugurated by President Pranab Mukherjee.
The convention recommended that holistic urban planning, which would include a focused effort towards affordable housing, would be imperative if India is to address the 18.78 million household urban housing shortages.
It also highlighted that optimal utilisation of land, especially of Government-owned land parcels, could improve land availability for real estate developers.
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