Home buyers and property developers don’t have to worry about having to pay a service tax if they are unable to get completion certificate from the local authority. The government may permit an independent authority to certify that the property is finished.
A finance ministry official said, “We are examining the issue and will see if a similar certificate from an outside agency can suffice”. Local authorities in certain states do not give completion certificates while others take plenty of years to give one. The budget for 2010-11 has suggested imposition of service tax on houses that are under construction.
The service tax will be charged only on 33% of the base price of a flat sold at construction stage. The actual service tax rate will be 3.3%, or 10% of 33%. The finance ministry may permit a certificate from an architect or builders association as an adequate proof of completion.
Builders gave a mixed response to the proposal. Rajeev Talwar, managing director of DLF, said the flexibility might be misused. But an official of Delhi-based builder Ansal API was all praise for the government’s decision. The official said, “If the government takes the decision to outsource the whole process to an accredited agency, it will take the pressure off the realty firms.”
Unavailability of completion certificate can raise the price of a property as the 3.3% service tax would be important, taking the tax portion to about 10% after inclusion the stamp duty.
Get the best deals on loan offers
Some useful personal finance calculators