Real estate developers are holding an emergency meeting to examine the effect of the service tax on housing and will speak to the government for rollback of the Budget scheme.
Rohtas Goel, president of industry agency National Real Estate Development Council said “We will call a meeting of the association to discuss the Budget proposals, particularly the levying of service tax on housing which will have a negative impact on the realty sector”.
He said the dates for meeting are still to be decided.
The meeting is expected to be attended by a many top developers, including realty companies DLF and Unitech.
While few developers say that the service tax of 10.3% would be levied on 33% of the total sales value, others say it should be levied on 33% of the total construction cost.
Sanjeev Srivastava, NAREDCO senior vice president said, “We will demand rollback of this proposal, otherwise it will have detrimental impact on the housing sector”.
A senior executive of a top realty company said, “Affordable housing will become non-affordable and black money would come into play due to this proposal. This is a clear case of mis-representation. The developer sells a flat/commercial building to the prospective buyer. On this sale, registration charges are paid to the state government. There is no service involved”.
Another realtor association Confederation of Real Estate Developers’ Associations of India had maintained that charging of service tax to all under-construction flats and homes being reserved before finishing will hike the final cost and will drastically affect affordability of the home purchaser.
With RBI’s recommendation of doing away with teaser loans, many prospective home buyers will find the homes unaffordable.
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