Sarahyoung
New Member
The recently presented Union Budget of India 2010-11 has imposed service tax on a particular type of transaction and few services offers to potential; home buyers. The summary of the service tax, imposed by the Union Budget, on to the Indian property market is as follows:
* Widening of Service Tax net:
Real Estate Developers will have to pay service tax on transactions where consideration is collected from prospective buyers prior to completion of construction. However, it seems service tax will not be applicable if the full payment is made after completion of the construction.
In addition, other services provided by the builders to prospective buyers such as providing preferential location or external or internal development charges (excluding vehicle-parking space) etc. shall also be covered.
Renting of immovable properties is also under service tax net and the definition of 'renting of immovable property service' has been clarified as well as widened to cover rent of vacant land under contract for undertaking construction of buildings or structures for business purposes. This may have negative effect on to the properties bought or to be bought solely for investment purpose. Overall, now most of the activities of Real Estate Management is now under service tax net.
Based on the above, I seek your views on the following:
I. Whether similar service tax is in existence in other countries also?
II. If is right to impose service tax at this point of time? Yes or No, Why?
III. How will it affect the actual home buyers or prospective commercial or retail property user?
Any other view is also welcome.
Thank You
sARAH
* Widening of Service Tax net:
Real Estate Developers will have to pay service tax on transactions where consideration is collected from prospective buyers prior to completion of construction. However, it seems service tax will not be applicable if the full payment is made after completion of the construction.
In addition, other services provided by the builders to prospective buyers such as providing preferential location or external or internal development charges (excluding vehicle-parking space) etc. shall also be covered.
Renting of immovable properties is also under service tax net and the definition of 'renting of immovable property service' has been clarified as well as widened to cover rent of vacant land under contract for undertaking construction of buildings or structures for business purposes. This may have negative effect on to the properties bought or to be bought solely for investment purpose. Overall, now most of the activities of Real Estate Management is now under service tax net.
Based on the above, I seek your views on the following:
I. Whether similar service tax is in existence in other countries also?
II. If is right to impose service tax at this point of time? Yes or No, Why?
III. How will it affect the actual home buyers or prospective commercial or retail property user?
Any other view is also welcome.
Thank You
sARAH