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Published & Updated as on -
2010-03-07
New Delhi: If you are planning
to buy a house, grab it before July, as realty prices are set to increase
later. The service tax of 3.3%, announced in the Budget, will be effective on
your home from July as the amendments to the Finance Bill will be put into
effect in June.
Moreover,
banks have decided to increase interest rates in the range of 0.25-0.5
percentage points on home loans, which could further be hiked in the
forthcoming credit policy.
Companies
including realty majors like DLF, under the aegis of Delhi-based real estate
body National Real Estate Development Council (Naredco), will soon approach the
FM for a rollback of service tax.
The
property prices are expected to go up with real estate companies passing on the
additional burden to buyers. Effectively, someone buying a house property in
Delhi will have to pay a service tax of 3.3% on the price of the accommodation
and also a stamp duty of 8% as a sale of immovable property. The 3.3% tax will
not include the amount to be paid towards special charges like garden facing or
community hall facility as these charges will be taxed at 10% of the total
charges. However, Sanjay Chandra, MD of country’s second-largest realty firm
Unitech says an increase in interest rates is unlikely to affect the demand as
the increase is only in trigger rates and hence there is no change in effective
interest rates.
“The
service tax will have some marginal impact, but the market will absorb that for
two reasons. One, the change in personal tax slabs will leave more disposable
income in the hands of consumer and second, the better prevailing economic
conditions are likely to result in at least 10% increase in the salaries of the
working class for the next financial year. These two facts will more than
offset the marginal impact of service tax, which is expected to be 2% to 3%,”
he said.
When
contacted, Naredco president and realty company Omaxe’s group chairman Rohtas
Goel said, “We will hold a meeting of the association to discuss the Budget
proposals, particularly levying of the service tax on housing, which will have
a negative impact on the realty sector.”
However, finance ministry officials
have said they won’t entertain any request for change in the Budget proposal.
Central Board of Excise and Customs member YG Parandhe said, “We are not taking
up.
Source: Financial
Express 6/3/10
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