The Finance Ministers recent move to reduce service tax has not brought much cheer for real estate players who say the tax should have not been imposed in the first place. Service tax on residential property is one more tax which should not be levied on housing.
You are already paying a stamp duty, so many duties on all the construction materials and there is provident fund for labour.
So you did not need one more tax. This reduction in tax which has come is not a reduction, it is a new tax which is unnecessarily put on residential property, said Nirajan Hiranandani, MD, Hiranandani Group.
The government announced that service tax would now be levied on 25% of the total value of property as against the current 33%, besides increasing the abatement provided to the sector from current 67% to 75%. Finance Minister Pranab Mukherjee said the construction sector had requested for a review of the changes in the service tax law proposed in this years Budget.