The Income Tax Department has put real estate firms, who developed housing projects for low- and medium-income groups, under the scrutiny for wrongful tax exemption claims.
Under section 80IB(10) of the Income Tax Act, 1961, profits are exempt from tax if the project is on a minimum land area of one acre, approved by a local authority prior to March 31, 2007, and is completed within four years.
In the Pune region, surveys in five cases have resulted in detection of wrong claims of Rs 40 crore on account of non-completion of housing projects within the four-year time frame. Subsequently, some more companies have been found guilty of violating the norms.
Following the Pune findings, the Central Board of Direct Taxes (CBDT) has instructed field formations across the country to verify such tax exemption claims by real estate developers.
The income tax officers are looking at whether approval and completion certificates were obtained from local authorities or not for the housing projects.
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