Realty developers demand renewal of tax exemption

New Delhi, Feb 13 (UNI) Real estate developers in the country have demanded the renewal of tax exemption under section 80-1B (10) of the Income Tax Act which is to lapse on March 31, 2007.

Section 80-1B offers income tax expemption on profit made by developers, while constructing small houses of less than 1,000 square feet in Delhi and Mumbai and 1,500 square feet in other cities.

In a survey conducted by Confederation of Real Estate Developers' Association of India (CREDAI), 72 per cent of the developers said they would reduce the number of such apartments, if the provision is not renewed.

While, twenty-eight per cent said if the provision is withdrawn, they would exit the small apartments segment.

Financial returns from premium segment apartments are higher than that from the small apartments. But the input cost in construction of small apartments is 15 per cent higher than that for the premium segment.

Demand for the small apartments from lower-income group and the weaker section is 13.5 million as against 1.14 million in the higher-income group and 1.56 million in the middle-income grup.

Therefore, to attract private investments in small apartments, government had extended tax sops on profit from construction of small apartments.

The survey said 43 per cent of the respondents are yet to avail of the incentive or in the process of availing of the incentive.

UNI