Published & Updated as on - 2010-03-07
ICICI
Bank, India's No. 2 lender, has raised auto loans by 25-50 basis points for
different tenors and segments, effective from March 5, a spokesman said on
Thursday.
The bank has also discontinued its special home
loan rate of 8.25 percent for two years, the spokesman said without
elaborating.
The bank will currently charge 8.75 percent for
loans up to 3 million rupees, 9 percent for loans of 3 million to 5 million
rupees and 9.5 percent for loans over 5 million rupees, he added.
Source: Reuters 4/3/10
Construction services
tax to raise cost of apartments
The budget proposal has thrown up a dampener for
the housing industry. Construction services have now been brought under the
ambit of the service tax in an unexpected move that would raise cost of
apartments that are still under construction. As per the Budget proposal, the
finance ministry has suggested that construction would be deemed to be a
taxable service if the building or complex is still under construction and
approval from the concerned regulatory authority — which in most cases is the
resident municipal authority — hasn’t yet been granted. The levy would cover
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 to additional services such as those offering preferential locations for
flats in multi-storey buildings where flats in each floor are priced at a
premium due to their location. This too has been described as a service and
hence taxable, according to the proposal which was tabled in Parliament on
Friday by finance minister Pranab Mukherjee. The premium is typically levied on
categories such as flats or apartments that are above a certain floor rise or
have other high value locations such as being in front of a garden or a sea or
any other preferred locality.
“The proposal is to tax construction if the entire
payment for the flat is made before completion of construction,” said
consulting firm RSM Astute executive director K H Viswanathan. “This would
increase the cost of the apartment and may discourage potential buyers.” The
service tax would be 10% on 33% of the price of the apartment, while on the
remaining 67%, tax won’t be levied.Till now, for all apartments under
construction, customers paid in instalments based on plinth level construction
and also on the progress in building activity. Banks too lent money to the
customers according to the requirement of the builder. Now most developers
would ask customers to pay the entire value of the building if they sought to
lock in at a certain value. This would mean paying the entire sum before the
construction. Typically, in cities such as Mumbai, where there is a pressure on
space and hence apartments and flats are much sought after, customers booking
for flats in an under construction, is very common. “The service tax and excise
duty hike on cement would increase the overall cost of apartment by about 10%,”
said Dharmesh Jain, managing director of Nirmal Lifestyles, a Mumbai-based
developer. “It’s a negative step and we are considering to meet the finance
minister to plead for a relook on this measure,” he added.
But there are other positive measures that the
Budget proposes such as allowing pending projects to be completed within a period
of 5 years instead of 4 years, for claiming deduction of profits, as one time
interim relief. There is also a suggestion that the commercial area included in
a housing project would now be 3% of the aggregate built-up area of the housing
project or 5,000 sq. ft, whichever is higher, compared to the existing limit of
2% and 2,000 sq.ft. respectively. This would help developers and real estate
companies to make their projects more viable.
Source: Economic Times 01/03/10
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