SERVICE TAX ON REAL ESTATE ?????

In a move that could prove to be a deterrent for the real estate industry, construction services have been brought under the service tax net. So be ready to shell out more for your dream house from now on. The recent budget proposal aims to levy a service tax of 10% on the price of the apartment if entire payment is made before the completion of construction. However, tax would be levied only on 33% of the agreement value. As realty companies typically pre-sell flats before completion of construction, this proposal is likely to hit the realty players in a big way. In an industry which is already paying an indirect tax in the range of 14-16%, the levy was not what the doctor ordered for. This move will discourage home buyers as the already high prices of the apartments are likely to increase further by 3-4%. Most realty companies will try to pass on the increased burden to the end consumer. Although majority of the developers have criticized this move and want a rollback in service tax, it seems that the FM is no mood to listen to them.