FINANCE MINISTER MR.PRANAB MUKHERJEE
In the days following the recent budget announcement, the Realty Industry has begun to express notable discontent regarding the service tax policy introduced by Union Finance Minister Pranab Mukherjee. On March 5, the Confederation of Real Estate Developers’ Association of India (CREDAI), in collaboration with the Surat Builders Association, directed a letter to the finance minister seeking the withdrawal of service tax on both sales and rentals of commercial and residential properties.
Within this correspondence to the central government, the associations emphasized the urgent requirement for a comprehensive action plan addressing urban housing, highlighting a staggering shortage of 27 million homes nationwide.
Tarun Rawal, the president of the Surat Builders’ Association and vice-president of the Gujarat chapter of CREDAI, pointed out that the city’s population has ballooned to 4.6 million at an alarming rate. He indicated that there exists a deficit of approximately 500,000 shelters within the city, underscoring the immense demand for sustainable housing solutions in larger metropolitan areas. He stressed that fulfilling this need necessitates a centralized policy to provide guidance and support.
The association urges the Union finance minister to reconsider the recently imposed service tax on the housing sector. They argue that this sector is essential for stimulating growth and creating affordable housing opportunities. Moreover, they call for incentives aimed at slum redevelopment and integrated townships. “Only with such provisions can our sector meet the burgeoning demands of our expanding nation,” Rawal asserted.
Developers within the real estate domain contend that the new service tax will disproportionately affect the middle and lower-income groups, making home ownership increasingly challenging. Additionally, the imposition of service tax on rental properties could negatively impact sectors such as IT, which are already experiencing downturns exacerbated by restrictions in the US.
What remains to be seen is how the finance minister will address these significant concerns.