In the Budget for the current fiscal 2012-13, Finance Minister has proposed to raise excise duty and service tax by 2%. Highlighting this point the president of National Real Estate Development Council (NAREDCO) mentioned that the property prices are going to rise by a minimum of 2% due to the hikes proposed in the budget.
He also mentioned that for the existing buyers and developers, only the service tax hike will be applicable but not the excise duty hike, as the agreements were already signed. However, the new buyers have to bear both the burdens.
Moreover, service tax was exempted on construction activities in specified infrastructure, canals, irrigation works, post-harvest infrastructure, residential dwelling and low-cost mass housing up to an area of 60 sq. mts under the affordable housing scheme in partnership.
He also mentioned that only 70% of the total expenditure of construction will bear the pressure of excise duty hike and the service tax will be charged on the remaining 30% of the expenditure. He added saying that due to excise duty hike, all raw materials like steel, cement, electric and other finishing equipment are also going to be more expensive, which needs to be controlled.
Source: The Economic Times