You’ll have to pay more for a new house

If you are buying a house worth Rs 50 lakh, the service tax alone will increase its cost by Rs 5.15 lakh. Naresh Kamath reports.

Houses that are being constructed will cost more. The new service tax of 10.3 per cent on sale of under-construction property, combined with a hike in the cost of cement and fuel, will be passed on to buyers, said Mumbai builders.

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If you are buying a house worth Rs 50 lakh, the service tax alone will increase its cost by Rs 5.15 lakh.

“The service charge is the most negative factor in the whole Budget,” said Pranab Datta, vice-president, Knight Frank India, a consultancy firm.

The move to continue the one per cent reduction on loans for houses costing less than Rs 20 lakh till March 2011 has not helped. “Where can you get a house for less than Rs 20 lakh in city limits?” asked Sunil Mantri, president (elect), Maharashtra Chambers of Housing Industry, the apex body of builders.