Finance Minister Pranab Mukherjee's decision to increase the tax concession on construction of real estate complexes from 67 per cent to 75 per cent of the gross value of property, including land value, has been welcomed by the industry and analysts.
The minister also announced that the low-cost housing (property up to Rs 20 lakh) segment would be exempted from service tax.
"This is really a very good move by the government and DLF welcomes this rebate provided to the real estate players.
Moreover, the decision of exempting service tax for low-cost housing will encourage more buyers," Rajeev Talwar, group executive director of DLF, told Business Standard.Raheja Developers agreed and termed the exemption from service tax on low-cost housing a positive move.
"Exemption of service tax on low-cost housing is a positive step towards improving urban infrastructure and fulfilling housing requirement in urban areas," said Navin M Raheja, managing director.
The decision to abolish service tax in the low-cost housing segment will boost consumers' sentiments, according to analysts.
"In India, we need a big boost for low-cost housing and the finance minister's decision will encourage both builders and consumers. I believe we will see more developers concentrating on the low-cost housing segment," said Anuj Puri, country head, Jones Lang LaSalle Meghraj.
Real estate associations are also happy with the tax concessions, but they still feel land should be taken out of the service tax net.
"We are really thankful to the finance minister for increasing the tax concession from 67 per cent to 75 per cent. But, we still feel that land should not be taxed under service tax," said Pradip Jain, NCR president, Confederation of Real Estate Developers' Associations of India.
According to National Real Estate Development Council, it is really a great move by the government. "We are very happy that in the Finance Bill, the government announced more rebate for the real estate sector.
"The decision of exempting low-cost housing from service tax is a very appreciable move," said Rohtas Goel, president.
