to developers was under Section 80-IB, which gave a tax holiday for housing construction subject to conditions, that would end this fiscal.
The conditions were that the area of the plot be at least 1 acre and the housing unit having a maximum built-up area of 1,000 square feet within the city limits of Delhi and Mumbai and 1,500 square feet elsewhere.
“The tax holiday under the Act is available only for construction of affordable housing or residential houses of small sizes. Most citizens still do not own houses and demand exceeds supply resulting in perpetual increase of real estate prices. Therefore, it is important to incentivise developers to construct houses of small sizes, so as to meet the demand and bring the prices under control,” says Rupesh Jain, partner, Vaish Associates Advocates.
It is a moot point whether this incentive has really led to an increase in the supply of affordable housing. There are several examples of recent home owners being sold a property say a 4BHK apartment measuring 2,500 sq ft that would comprise one 2BHK apartment of 1,500 sq ft and another 2BHK apartment of 1,000 sq ft. The apartment would doubtless come with two front doors and two name plates.
“Of course, there were some instances of the section being misused but largely it was successful in encouraging construction of large scale affordable housing. It should be brought back in some form in the coming Budget,” says Bajaj. “In our view, it is still necessary to continue with a tax holiday for housing,” adds Jain.
Other stakeholders say that the focus of any incentive should be on affordable housing. “Given that the relevance of housing as a ‘social need’ has been recognised, the sector needs to be supported by adequate policy initiatives and interventions, especially with respect to the creation of affordable housing stock,” says Sachin Sandhir, MD, RICS- South Asia.
“The truth is that while ‘affordable housing’ may qualify for the status, the luxury segment does not qualify in any way at all. One has to be therefore very careful. Putting affordable housing in the infrastructure category, would make funding