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Taxes applicable for construction of an >apartment currently are – service tax of 4.0788 per cent; VAT 3 per cent; and stamp duty of 9/10/11 per cent.
Consequently the total tax payable by a person who purchases apartment ranges from 16 per cent to 19 per cent approximately of the purchase value of the apartment.
This is in addition to excise duty and VAT paid on materials used in the construction for which credit is not provided, says Sherry Samuel Oommen.
Consequently, the overall tax cost borne by the purchaser of an apartment would range anywhere between 25 per cent and 30 per cent. This is a substantially high tax cost especially considering the fact that this is a very important sector, he added.
The Centre and the State should have a relook at this and either reduce the rates or reduce the burden by making available excise duty/ VAT credit, Oommen said.
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