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Budget 2010

Last updated: February 27 2010
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  • Budget 2010

    What do all of you think about todays budget?

    Tax rate reduced. Section 80ccc marginally increased. Stimulus tax cuts only partially rolled back. Stock markets are up.

    Nothing much regarding realty sector that I could see.

    Status quo in RE is what I think. Neither good nor bad.
    Venky (Please read watch a or before posting)
  • #2

    #2

    Re : Budget 2010

    4% service tax on Realty builders.
    This will be passed to consumers.

    Comment

    • #3

      #3

      Re : Budget 2010

      Fringe costs like PLC, corner/ park facing etc would now demand more tax.

      ]http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/construction/Union-Budget-2010-Budget-a-mixed-bag-for-real-estate-EY/articleshow/5620721.cms[/URL]

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      • #4

        #4

        Re : Budget 2010

        Hell !!!

        How exactly does it work? Is it only for new sales?Or old bookings also
        Venky (Please read watch a or before posting)

        Comment

        • #5

          #5

          Re : Budget 2010

          Originally posted by Venkytalks View Post
          Hell !!!

          How exactly does it work? Is it only for new sales?Or old bookings also
          There's no clarity about the impact on service tax on residential real estate. However, if this article is to be believed, the impact is huge!! It implies that the cost of your apartment (already purchased but under construction) will go up by 10%!! That is huge!

          ]http://www.dnaindia.com/money/report_big-knock-for-realtors_1353178[/URL]

          Comment

          • #6

            #6

            Re : Budget 2010

            Service tax would be levied on 33% of the apartment price with the assumption that 66% is material cost and 33% is the cost of services.

            Suppose flat price is RS 30 Lakh.

            Service tax payable is 10.3% on 10 lakh.

            Comment

            • #7

              #7

              Re : Budget 2010

              Originally posted by sanjeevchaudhri View Post
              Service tax would be levied on 33% of the apartment price with the assumption that 66% is material cost and 33% is the cost of services.

              Suppose flat price is RS 30 Lakh.

              Service tax payable is 10.3% on 10 lakh.
              There is going to be a 3.4% cost escalation because of this as per todays TOI.

              Hugely negative .

              Almost 1 Lakh extra on the cost paid for a 30L flat - that is not a joke.

              We will be forced to pay service tax - although builder does not provide us any service.
              Venky (Please read watch a or before posting)

              Comment

              • #8

                #8

                Re : Budget 2010

                Originally posted by Venkytalks View Post
                There is going to be a 3.4% cost escalation because of this as per todays TOI.

                Hugely negative .

                Almost 1 Lakh extra on the cost paid for a 30L flat - that is not a joke.

                We will be forced to pay service tax - although builder does not provide us any service.
                Not sure if the service tax would be levied on old bookings also or is only for bookings after 26th Feb 2010.

                Someone please shed some light on this aspect.

                Comment

                • #9

                  #9

                  Re : Budget 2010

                  I suspect that your instalments paid after 1st April 2010 would attract service tax. What you have already paid is over and done with.

                  Better to pay as much as possible before March 31st. Companies will probably start despatching demand letters on a war footing

                  Originally posted by sanjeevchaudhri View Post
                  Not sure if the service tax would be levied on old bookings also or is only for bookings after 26th Feb 2010.

                  Someone please shed some light on this aspect.
                  Venky (Please read watch a or before posting)

                  Comment

                  • #10

                    #10

                    Re : Budget 2010

                    Flat buyers exempt from service tax

                    The Central Board of Excise and Customs (CBEC) has made it clear that flat buyers, developers and builders are not liable to pay service tax.


                    In a circular (F.No.137/12/2006- CX.4) issued on January 29, 2009 the board has said that generally, the initial agreement between the developer (promoter/builder) and the buyer is an "agreement to sell". As per provisions of the Transfer of Property Act, this does not "create any interest in or charge on such property".

                    It is only after the construction is completed and the agreed sum is paid that a sale deed is executed, transferring the ownership of the property from the builder/developer to the buyer, the board has said.

                    Any service provided by the developer during the construction of a residential complex -- before the execution of the sale deed -- would be "self-service" and, consequently, not attract service tax, the board has clarified.

                    Comment

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