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High-end homes turn a tad more expensive

  • HT Correspondent, Hindustan Times, New Delhi
  • |
  • Updated: Mar 01, 2013 01:10 IST

Buying a home, especially in the metropolitan cities, will now turn costlier with an increase in service tax by the finance minister P Chidamabaram.

The increased service tax rates would largely affect mid-and large sized houses with carpet area over 2,000 square feet and luxury homes priced over rupees one crore.

"Homes and flats with a carpet area of 2,000 square feet or more of a value of Rs 1 crore or more are high-end constructions where the component of 'service' is greater. Hence, I propose to reduce the rate of abatement for this class of buildings from 75% to 70%," Chidambaram said in budget speech. 

The reduction in abatement from 75 to 70% implies that the service tax would be now be levied on 30% value of the price of an apartment. Till now the service tax was levied on 25% of the value of an apartment's price.

The changed service tax rates come into effect from March 1, 2013.

"An apartment that costs more than Rs 1 crore will now be more expensive by around Rs 61,800," said an analyst at consultancy firm Deloitte.

The service tax was earlier levied on a value of 33% of the price of an apartment that was reduced to 25% in last year's budget.

 

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First time home buyers to get additional tax break of Rs. 1 lakh

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