THE real-estate sector in the city is bracing for a major property rate hike following the new excise and service tax rates announced in the Union Budget. Even though there is only 2 percent increase in service tax and ex-cise duty, the impact is set to increase property rates between Rs 50-1(K) per square feet. Property developers in the city said they will pass the burden of increase in tax rate on to consumers, but pointed out that there will be no hike in rates of properties for which bookings had already been made. Director of B U Bhandari Landmarks, Anuj Bhandari, said that the "increase in duty rates will be passed on to consumers." Developers and CREDAI officials said that the impact of the increase in service tax and the excise duty is actu-ally much higher than what came as an announcement. "It is not only cost of labour which is increasing after the hike in service tax, but cost of fuel and transportation will also increase and the impact should be much higher. The rate of property will increase by Rs 50 to 100 per square feet. While the cost of residential property should increase between Rs 50 and 70 per square feet, it could increase between Rs 75-100 per square feet for com-mercial properties," said vice presi-dent of the Confederation of Real Es-tate Developers Association of India (CREDA1), Pune-Metro, Rohit Gera. The increase in service tax and ex-cise has come at a time when the con-struction activity in the city is on in full swing and the demand for construc-tion material is huge, pushing up cost of construction material. "There is a demand pressure which increases input cost of construction industry. The developers are trying their best to complete projects ahead of the moonsoon which adds as a pres-sure for prices. But increase in cost of construction material has been very high" said, Tejraj Patil, Owner of Tejraj Promotors and Builders. Gera said that besides the increase in service tax which developers have to pay, buyers have also to pay half percent increase in service tax. " The service tax for people who purchase property has increased from 2.5 to 3 percent. The service tax has to be paid directly by buyers to the government. So the increase in service tax of con-sumers will only add to the cost of the property," said Gera. He added that the hike in the ser-vice tax and excise has come after a gap of over two years and in the Bud-get the tax rate has been brought at par with the rate that was exsisting at the time of recession.
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