You Future Investment Plans Will Cost You More

Increment of Service Tax
Yes, you read me right although the cost of property is not going up in recent days but there are reasons you will have to spend more in case you have plans to invest in a new property. This is all due to increase in service tax that will go up by 1.64% or in other words from 12.36% applicable now to 14% from 1 April 2015 onwards. That simply means a further increase of 1.64% on all transactions that attract a service. I will make it even simpler a transaction worth Rs. will cost you Rs. 1640 extra from April 2015 thereby increasing the price of under construction or future investment. 

Service Tax on purchasing a House
We all are aware that Service Tax is levied on all kind of services used by consumers in India and in most of the countries (The rates vary from country to country) but perhaps Indian consumer pays the highest service charge anywhere in the world. However, from now on you shall have to shell out an extra some for buying an under construction or a ready to move home as the builder is considered a service provider for the buyers. Let me put the facts straight at this point that the service tax is not applicable for the entire cost of property but the construction part of it, therefore the cost of land is not included while calculating the service tax.

Another crucial factor

There is an important point here that properties worth under one crore of Rupees are calculated based on 25% as their construction cost so let us keep it this way a property worth Rs one crore will attract service tax at Rs 25 lacks. That if further calculated will be 25 lacks x 14% = 3.5 lacks. In case the cost of property is more than one crore the calculation will be based on 30% construction cost in place of 25%. For instance if the cost of property is 1.5 crore, the calculation of service tax will be applicable on 45 lacks. And the issue of increased service tax does not finish here but one has to keep in mind the other associated items with a property like development charges, parking location, maintenance, home insurance and of course logistic charges while shifting the home.

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Suny

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Keywords :
Service tax , Cost , Property , Extra , Increment , Transaction , House , Property , Provider

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