The Hindu Business Line : `Withdraw service tax on residential complex construction'

TERMING the levy of service tax on construction of planned residential complexes as a `retrograde step' that would escalate the prices of dwelling units by at least Rs 50 per sq. ft. even for LIG and MIG houses, the Confederation of Real Estate Developers' Associations of India (CREDAI) has sought its withdrawal.

In its pre-Budget memorandum, the association, which represents more than 80 per cent of the organised real estate developers from 17 States, said that withdrawal of the tax would give the purchaser a relief to the tune of 5-8 per cent in the overall pricing.

CREDAI stressed on the need to promoting housing as a viable `investment' alternative for attractive rental income, and to promote housing for low income groups. "It is recommended that to increase rental-housing stock, incentive be provided by way of an investment allowance at the rate of 20 per cent of such investment for five years as an optional benefit to the deduction under section 80C. By allowing this benefit, the expected loss of income-tax collection will be made-up by increased collection from indirect taxes," it said.

The association has recommended that rental income from newly constructed let-out houses, with the area of each unit of up to 150 sq metres, be exempted from income-tax at the rate of 100 per cent for first five years and at 50 per cent for next five years.

"In order to promote slum area re-development and low-cost housing, we suggest SEZ type of benefits (like exemption from excise and sales tax on the inputs and from stamp duty on first allotment). Th low-cost housing project could be defined as the one which has tenements of less than 50 sq. mt. built- up subject to essential shopping requirements as decided by the local authority," it said urging the Centre to take the lead in the proposed initiative.

The memorandum further said that though under section 80 IA, profits from development of industrial parks are totally tax free, one of the conditions stipulated in the Act says that the minimum number of units to be provided in the industrial park should not be less than 30 and that no single units shall occupy more than 50 per cent of the allocable industrial area.

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