CONSTRUCTION SERVICES TAX TO RAISE COST OF APARTMENTS

Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} The Budget proposals have thrown up a dampener for the housing industry . Constructionservices have now been brought under the ambit of the service tax in anunexpected move that would raise costof apartments that are still under construction. As per the Budgetproposal, the finance ministry has suggested that construction would be deemedto be a taxable service if the building or complex is still under constructionand approval from the concerned regulatory authority — which in most cases isthe resident municipal authority — hasn’t yet been granted. The levy wouldcover all construction of complex service or commercial or industrial construction services, the Finance Bill suggested. The service tax levy would be 10.3% and would also apply toadditional services such as those offering preferential locations for flats inmulti-storey buildings where flats in each floor are priced at a premium due totheir location. This too has been described as a service and hence taxable,according to the proposal which was tabled in Parliament on Friday by financeminister Pranab Mukherjee. The premium is typically levied on categories suchas flats or apartments that areabove a certain floor rise or have other high value locations such as being infront of a garden or a sea or any other preferred locality. “The proposal is to tax construction if the entire paymentfor the flat is made before completion of construction,” said consulting firmRSM Astute executive director K H Viswanathan. “This would increase the cost ofthe apartment and may discourage potential buyers.” The service tax would be10% on 33% of the price of the apartment, while on the remaining 67%, tax won’tbe levied. Till now, for all apartments under construction, customerspaid in installments based on plinth level construction and also on theprogress in building activity. Banks too lent money to the customers accordingto the requirement of the builder. Now most developers would ask customers topay the entire value of the building if they sought to lock in at a certainvalue. This would mean paying the entire sum before the construction.Typically, in cities such as Mumbai, where there is a pressure on space andhence apartments and flats are much sought after, customers booking for flats in anunder-construction building, is very common. “The service tax and excise dutyhike on cement would increase the overall cost of apartment by about 10%,” saidDharmesh Jain, managing director of Nirmal Lifestyles, a Mumbai-baseddeveloper. “It’s a negative step and we are considering to meet the financeminister to plead for a relook on this measure,” he added. But there are otherpositive measures that the Budget proposes such as allowing pending projects tobe completed within a period of 5 years instead of 4 years, for claimingdeduction of profits, as one time interim relief. There is also a suggestionthat the commercial area included in a housing project would now be 3% of theaggregate built-up area of the housing project or 5,000 sq. ft, whichever ishigher, compared to the existing limit of 2% and 2,000 sq.ft. respectively.This would help developers and real estatecompanies to make their projects more viable. Courtesy:- ET dt:- 01-march-2010 For more information regarding apartment in gurgaon, bedroomapartments, buy property in india, commercial complex in india, commercial realestate, commercial space in gurgaon, dealers, flats for sale, indian realestate investment, investment options in real estate, luxurious flats, malls,office space, office space in gurgaon, online real estate, penthouses gurgaon,plots, property consultants, property in gurgaon, property india, propertyinvestment, real estate company, real estate developer, real estate gurgaon,real estate in india, real estate investment strategies, real estate market,real estate news, real estate portals, realtors, realty, residence, residentialreal estate, sell property, shop, villas, Residential Apartment   Visit    www.zameen-zaidad.com             www.propertycafeteria.com  

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