Built homes may go out of middle class? hands

EXPECT PROPERTY prices to shoot up even further during the coming months in the city.The State Government has launched a drive to register city builders for payment of sales tax following the Supreme Court order which had defined the construction of a multi-storeyed apartment through collection of the booking amount for flats as a ?working contract? between the builder and the purchaser of flats and hence taxable.

EXPECT PROPERTY prices to shoot up even further during the coming months in the city. The State Government has launched a drive to register city builders for payment of sales tax following the Supreme Court order which had defined the construction of a multi-storeyed apartment through collection of the booking amount for flats as a “working contract” between the builder and the purchaser of flats and hence taxable.

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Official sources here inform the Sales Tax Department has already acquired the list of builders from the Lucknow Development Authority (LDA) to identify those who would now be liable to pay sales tax on sale of property.

“The State Government would not require issuing a notification before levying sales tax on builders as the Supreme Court had already issued an order making the “working contract” between the builder and the purchaser of flats as taxable,” sources say.

There are an estimated 50 large and small builders in the city with a sizeable number of projects which are in the various stages of construction through utilization of the booking amount for flats collected from the purchasers.
Till now, two large builders in the city have already got themselves registered for payment of sales tax.

The builders when contacted by HT Lucknow Live stated that the sales tax liability on them would result in further rise of property prices as the tax burden would be passed to the purchaser of flats.

Already the service tax being charged from the builders by the Union Government for projects having more than 12 residential flats has led to
property prices shooting up by nearly 20 to 22 per cent during the past one year.

“The property price hike is inevitable during the coming months. It’s only a matter of time”, commented Manish Khemka, proprietor of broking house ‘Investmania”.

Sources said the Sales Tax Department would also seek the assistance of the Department of Excise, Customs and Service Tax, Lucknow Circle to identify the builders who are already paying service tax.