The Hindu Business Line : Plea to exclude real estate sector from service tax net

THE Confederation of Real Estate Developers' Associations of India (CREDAI) has asked the Government to keep the real estate sector out of the purview of the service tax.

"The association has reiterated that real estate development is not a service industry but is being sought to be made one by the legislation," a statement from the association said.

In its pre-Budget memorandum to the Government, the association had sought core status to the real estate industry.

" There is inequity in considering a real estate developer as a service provider when he does not clearly provide any service as compared to other service providers," said Mr Kumar Gera, President of the association.

He added that the issue stood magnified by the fact that the levy of service tax in the case of the developer was nothing but a tax on profit, arising out of appreciation and value addition of immovable property.

In the case of real estate developers, their customers are not clients but customers who purchase immovable property.

"A builder is perceived as seller of immovable property. In the format of business, immovable property is sold to the customers by making them members of the society, association, etc. The final transaction between members and their customers are, therefore, not one of providing a service for which an invoice is raised. In such circumstances, developers do not have any opportunity at all to raise any bill on their customers for passing of any such burden of service tax," Mr Gera said.

More Stories on : Real Estate & Construction | Taxation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page