Making the Scheme for profit-linked income tax exemption for promoters of affordable housing scheme announced last year more attractive, the Union Finance Minister Arun Jaitley proposed a number of changes while presenting the General Budget 2016-17 in Lok Sabha. Jaitley said that instead of counting the built-up area of 30 and 60 sq m, it will be the carpet area of 30 and 60 sq m of the houses that will be counted under the scheme. He also said that the 30 sq m limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 sq m will apply. The Finance Minister also proposed to extend the completion period of the building of the houses after commencement under the Scheme from the present three years to five years.
At present, the houses which are unoccupied after getting completion certificates are subjected to tax on notional rental income. For builders for whom the constructed buildings are stock-in-trade, Jaitley proposed to apply this rule only after the end of the year in which completion certificate is received so as to give the builders some breathing time for liquidating their inventory.
In his Budget Speech, Jaitley also proposed to reduce the holding period for considering gain from immovable property to be long term from the present three years to two years and the base year for indexation to be shifted from 1/4/1981 to 1/4/2001 for all classes of assets including immovable property.