The Surat Builders' Association along with their parent body Confederation of Real Estate Developers' Association of India (CREDAI) has urged the Union finance minister to withdraw service tax imposed on sales and renting of residential and commercial spaces.

In a letter to the Centre, the association has also said that a comprehensive action plan for urban housing is a must' as there is a shortage of 27 million houses in the country at present.

"Looking at the population explosion in the city, where the figure has gone up to 46 lakh in no time, we have a shortage of about 5 lakh dwellings in the city itself," said president of Surat Builders' Association Tarun Rawal, adding, "In almost all bigger cities, the need for affordable housing is huge and to fulfill that we need a central policy and plan to guide it."

The CREDAI letter dated March 5 urges the Union finance minister to look into the matter of service tax on housing sector. The sector is critical for growth as well as to create affordable housing. Slum re-development and integrated township incentives are required.

"Only if this is provided will the sector be able to fulfil the need of a growing nation," said Rawal, who is also the vice-president of Gujarat chapter of CREDAI.

It is argued by real estate developers in the letter that this service tax imposition will ultimately make buying houses more difficult for the middle and lower classes. Similarly, service tax on rented property will adversely affect certain segments like IT sector as they are already showing declining trend when the US restrictions have also affected them.