Key changes proposed for real estate sector: PwC

Published on Fri, Feb 26, 2010 at 17:08   | Updated at Sat, Feb 27, 2010 at 11:07 Source: Moneycontrol.com

By PwC

Special emphasis has been given to promotion of housing and Hotel sectors. Benefits proposed for Housing sector include extension of Interest subvention scheme upto March 31, 2011, extension of deadline for completion of pending housing projects by one year without losing tax holiday u/s 80-IB, relaxation in norms for built-up area of shops and other commercial establishments in such eligible housing projects and increased budgetary allocations for urban development and housing schemes.

Proposed benefits for Hotels include extension of investment linked deduction benefit to new hotels of two-star category and above anywhere in India and extension of commencement date for two-star, three-star or four-star category hotel or convention centres located in the NCR of Delhi extended from the present 31st March, 2010 to 31st July, 2010 (for purposes of deduction u/s Section 80-ID of the Income-tax Act).

Certain immovable property transactions involving time gap between the booking of a property and the receipt of such property on registration excluded from anti abuse provisions relating to transfer of immovable property without adequate consideration.

Indirect tax proposals impacting the sector include increase in Excise duty applicable to cement and cement clinkers. Service Tax net has also been widened. Putting to rest all controversies regarding applicability of service tax on rental arrangements, definition of ‘Renting of immovable property service’ clarified and also widened to cover rent of vacant land under agreement / contract for undertaking construction of buildings or structures for business purposes. ‘Construction of complex service’ activity deemed to be a taxable service provided by the builder/promoter/developer unless entire consideration paid after the completion of construction. Additional services provided by builders to prospective buyers such as providing preferential location or external or internal development charges (excluding vehicle-parking space) covered.