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Service tax goes, buyers smile
December, 09th 2013

Those purchasing a house have a reason to cheer. They can buy the property without having to pay any service tax for maintenance and repairs.

Flat buyers were required to pay 12% service tax as one-time maintenance fee to central excise department. Builders collect a one-time payment for maintenance and repairs of the property for a particular period post construction. The amount includes charges for lighting in the compound area, lifts and cleanliness. It is collected for a period until the residents form a housing society of their own.

However, Pune bench of central excise service taxes appellate tribunal (CESTAT) has given the respite in its judgement recently.

Realtors too are happy with the ruling. Indore-based builder, Rajesh Mangal, said that the ruling will not only benefit buyers but builders as well. "It will bring down cost of properties though marginally," he said.

Another builder, Paramjit Singh Chhabra, said, "There is already heavy taxation on real estate sector in the country. Whatever relief is provided is always welcome."

The largest body of real estate developers, Credai, has also hailed the move. However, it believes that the government must clarify under which category the real estate sector falls. President of Credai in Indore, Vijay Mirchandani, said, "We are ready to pass the benefit to our customers, once the government comes up clear on service tax."

The issue will be taken up during a three-day national conclave of the sector to be held by Credai in New Delhi later this month.

Vice-president of Bhopal chapter of Credai, Manoj Singh Meek, said, "We want the government to classify the sector and charge taxes accordingly. Currently, we are asked to pay other taxes like VAT and stamp duty too, which need to be reviewed by the government on the lines of service tax waiver on maintenance charges."

Central excise department is likely to take up the matter to the high court. Hence, builders across the state believe that even if the court's order comes against the tribunal's judgment, it must be clarified that no such service tax will be applicable during the gap period."

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