Few days after the budget is announced the Realty Industry started showing discontent in concern with the service tax policy announced by the union finance minister, Pranab Mukherjee. The Confederation of Real Estate Developers’ Association of India (CREDAI) with the Surat Builders association wrote a letter dated March 5 to the finance minister, Pranab Mukherjee asking to withdraw service tax imposed on sales and renting of commercial and residential spaces.
In the letter to the Centre, the association has also said that a inclusive action plan for urban housing is necessary as there is a shortage of 27 million houses in the country presently.
President of Surat Builders’ Association and the vice-president of Gujarat chapter of CREDAI Tarun Rawal said that if we look at the population explosion in the city the figure has gone up to 46 lacs very fast but there is a shortage of about 5 lacs shelters in the city itself. He added that the need for sustainable housing in most of the big cities is huge and to fulfill that we must have a central policy and plan to guide it.
The association compels the Union finance minister to look into the matter of service tax imposed on housing sector as the sector is crucial for growth to create affordable housing. Slum re-development and integrated township incentives are also required. “Only if this is provided the sector will be able to fulfill the need of a growing nation,” said Rawal.
It is argued by real estate developers that the imposition of service tax will eventually make buying houses more difficult for the middle and lower classes. Similarly, service tax on rented property will adversely affect sectors like IT sector since they are already showing declining trend when the US restrictions have affected them.
What the finance minister decides is what should be looked for now.