Kabhi khusi kabhi Gham, Some good and some bad news for Real Estate Developers in Budget 2010, when it seemed that the government is on way to finally resolve the disputes of in the construction and real estate industry.
The area shouldn’t have been considered under the circumference of Service Tax, but of course can be called as ‘Manufacturers’. The constructions of Commercial or Industrial services are taxable since 2004 whereas Complex constructions came under the Service Tax criteria in 2005. Since the initiation of Service Tax many contentious issues have been seen in areas of Construction services.
However, previously, the government initiated “Sale Deed” to loosen the confusion at initial stage in transferring ownership from builder to buyer with respect to payments for Service Tax, Budget 2010 brought here created further ambiguity.
Another area being taken by the Government is ‘Renting of Immovable property Service’, where agreement is made for future construction on vacant land given by public or private builders to lessee. It has been reported that in many states, the local industrial corporations or Public Sector Undertakings (PSU) or even private organizations rent vacant land on a long term lessees with an insight that they would construct commercial structure in future. One more prickle on eye is service Tax on Residential projects, which will raise the selling prices of housing properties.
Whether constructors are Service Providers or Manufacturers, this puzzlement is being raised by many Real Estate Developers. Mr. Jaxay Shah, President, CREDAI-Gujarat, said that we are Manufacturers as we construct buildings so that we are not liable to pay Service Tax. He told that in today’s modernized vista the need of the hour is affordable urban housing. People go for all time terrific things with reasonable prices. Service Tax including other levies mounts prices in housing projects.
He told that we may see the other 4 % climb on the sale value of residential properties. Certainly, the government presented an appreciable budget in direct taxes but failed to deliver and give satisfying modification for Indirect taxes in housing industry. Further, he said, Government should have thought to extend the limits (1.5 lacs) of bank loans for residential properties as well as should have thought to eliminate the Service Tax.
Budget 2010 delighted Real estate developers in Direct Taxes however there is need to rethink about Service Tax norms, told Mr. Suresh Patel, Vice-President, GIHED. He assumed that the Budget 2010 has brought many applauded proposals for Direct Tax in Real Estate Development. The Government introduced admirable Income Tax slabs and given investments on long term infrastructure bonds.
Akin the treatment in Indirect taxes wouldn’t have been seen. Excise Duty in Cement and other material products will go high at 10% excise duty. And this may cause to high cost for middle class people.
So Budget 2010 gives some khushi but many ghams.
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