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Real estate companies may come under renewed pressure after the Supreme Court delivered a big retrospective tax blow to real estate developers. Builders now have to pay 5 per cent value-added tax from June 2006 after the Apex Court upheld its judgment in the K Raheja case.
The court says states can now levy sales tax on yet to be constructed flats as the building contracts are a species of ‘works contracts’. Analysts believe that this will have a significant impact on the companies operations and net worth.
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