80IBA Housing Project.

Sir,

Our firm is eligible for deduction u/s.80IBA for affordable housing project. Income earned from this project is 100% tax free.

But our tax consultant opinion is that we have to pay tax on that income u/s.115JC, Alternative Minimum Tax, 18.50% +Surchage+Cess. And this amount will carry forward to next assessment year and we can claim this amount if normal tax arrives greater than alternative minimum tax. Our project is full covered by u/s.80IBA and there is no question arrive in future that our normal tax will be greater than alternative minimum tax.

So our question is that,

01.How can we say that 80IBA affordable housing project is 100% tax free?

02.What about amount paid by us under section 80IBA? Because in future there is no chance that our normal tax           liability will be greater than alternative minimum tax.

03.Can we claim alternative minimu tax credit in future if we start other housing project that not comes u/s.80IBA?

Waiting for valuable guidance.

Thankns & regards.

Replies (3)
Quick Summary
This discussion clarifies the tax treatment of income from 80IBA-eligible affordable housing projects. While the income is generally 100% tax-free under normal provisions, the Alternative Minimum Tax (AMT) may still apply. The AMT credit can be carried forward for up to 15 years and can be utilised against future tax liabilities, even from other projects not covered by Section 80IBA.

01.. Section 80IBA affordable housing project is 100% tax free as per normal provision but as Alternative minimum tax (AMT) provision is also applicable to you than you are required to pay AMT. So, if there is no chance to use that credit in future, than it's not 100% free for you.

02.. AMT credit is allowed to be carry forward for maximum 15 years, so you are required to use that AMT in 15 years,if in future there is no chance that normal tax liability will be greater than alternative minimum tax, than your AMT credit will be lapsed.

03.. Yes, You can claim alternative minimum tax credit in future if you start other housing project that not comes  u/s.80IBA in same firm.

Thank you very much Sir for your valuable guidance.

You are most welcome, sir
Feel free to contact if you need any further information/assistance.

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