Green buildings may get tax breaks

NEW DELHI: Real estate developers constructing energy-efficient (green) buildings may get tax breaks in the coming Budget. If the buildings meet the “green” standard, a part of the builders’ construction cost would be set off against their income tax liability.

The Energy & Resources Institute (Teri) is already in the process of establishing a grading system for buildings. According to the proposal, the higher the rating, the greater will be the tax concessions for builders.

The proposal has been mooted by the ministries for environment and forests, urban development and power and is now being considered by the finance ministry. “The Energy Conservation Building Code is in the process of being implemented for new commercial, institutional and large-scale residential buildings. As soon as developers start following the new code, they can avail of the tax breaks,” a source in the government said.

The government also considered offering property tax breaks to developers constructing green buildings. Sources said the idea was shelved as property tax formed a major portion of revenue for urban local bodies.

Green buildings save on operating costs by being energy and water efficient. For grading energy-efficient buildings, a group of experts evaluate the environmental performance of a building over its entire life-cycle by awarding points for meeting design and performance criteria.

The urban development ministry is also set to amend the National Building Code to include rating standards for energy-efficient buildings. The new building code is slated to be released in two months.

According to the International Energy Agency, almost 40% of the global energy demand generate from buildings, which need energy for heating, cooling, cooking, lighting, and running appliances. This is expected to grow by 45 % by 2025.