There is much ambiguity surrounding the newly levied service tax even as developers are planning to approach the finance minister seeking a rollback. They are also gearing up to pass on the hike to you. Bloomberg UTV tries to decode service tax for you and whether you are liable to pay this tax if your developer did not deliver in time.
If you are battling with a delayed project and want to know if you are liable to pay service tax, considering you booked an apartment say in 2007 and the developer has missed the original possession deadline, read on:
We spoke to a host of experts and according to their understanding if service tax is to be levied on all underconstruction projects, developers will have to pay this tax and in all likelihood they would pass on this tax to the consumers.
Service tax will also be levied on projects that will be launched post April 1, 2010. So this is what it's going to add up to - on a Rs 20 lakh property, you could end up paying Rs 70, 000 more now this is including the 3% service tax and higher input costs.
It's not only the residential sector, the service tax also proposes that 10% of the rent you shell out for an office space can be charged as service tax, which means if you are paying Rs 2 lakh as monthly rent for your office space or your store, you might have to pay Rs 20,000 extra as tax.
Clearly, home buyers will have to gear up for some more number crunching this July onwards unless of course the developers manage to convince the finance minister otherwise.