Your Dream House To Cost More, Budget 2012
The developers as well as home buyers had high hopes from the Union Budget 2012. Although, there is not much good news, rather now the industry has to deal with increased rates of service tax and excise duties.
Increase of service tax is a serious deterrent and developers fear that all the good aspects of the budget shall be overshadowed by this step. The service tax on real estate was introduced in the budget 2011 and the industry was just getting used to it. The increase in the service tax rate from 10% to 12% is bound to put additional pressure on the home buyers.
With the increase in excise duty, the cost of basic inputs like cement and steel, furnishings, etc, will go up. With the rate increase, the cost of construction will increase by approx by 0.50 – 0.75%, which can be translated to up to 100 per sq ft, which would at the end be borne by the home buyers.
A cross-section of developers and builders believe that this may lead to a slump in the real estate market, which will have a cascading effect on every sphere of the economy.