Yes, home loans also will cost you more now, But I think that the RBIs rate cut on the repo will balance that. But the home insurance wil also increase from now on.
Hey in this way the home loans will also increase no? I mean,, if you are taking a home loan, you have to pay service tax on the processing fee and other charges as well right?
Not only all the amenities and facilities, Increase in service tax will also have an effect on some accompanying costs, such as services of a property agent, valuer, lawyers and so on.
I agree with you. Many of the apartmnets and flats nowadays anyway come with all these facilities. The rate of service tax on these charges will also go up from 12.36% to 14%.
Oh I think that the prices of property will be going really high from now on, especially as many of them have extra charges added to them. Besides the basic cost of the unit, a homebuyer also has to pay additional charges for facilities such as preferential location, car parking, club membership, rain water harvesting and others.
To explain in easy terms, suppose you plan to buy an apartment worth Rs.1.25 crore. If you buy this in March itself, you will have to pay a service tax of Rs.4.64 lakh at the rate of 12.36% on 30% of gross value, or 3.71% of total gross value.
It will become 3.50% (14% on 25% of property value) and 4.2% (14% on 30% of property value) for properties valued below and above Rs.1 crore, respectively
Hey, but these rates are as of now, but they are likely to change once the Finance Bill, 2015 is passed. So i think that we can expect some change in the property prices soon.
As service tax is charged only on the construction cost, the effective rate on the entire value of a property below Rs.1 crore is 3.09% (12.36% on 25% of property value)
For example, 25% of the gross value of an under-construction unit with value less than Rs.1 crore is considered to be the cost of construction, and service tax is applied on this.
Actually, the effect of service tax is felt more on high-value properties. Properties valuing more than Rs.1 crore will have a service tax of 30% of the gross value
But the service tax is not charged on the entire value of the property but only to the extent of cost of construction. This means that cost of land is excluded in this,..
Yeah, This is so because, in case of an under-construction property, the developer is deemed to be the provider of construction services to the homebuyer, and hence service tax is charged on the cost of construction.
As the service tax has increased, you can expect the prices of the under construction buildings t go up as well. Service tax is applicable on almost all services that a consumer avails, including buying an under-construction property
Yeah, i think that post the union budget for the year 2014-2015, the prices of the under construction and all the upcoming properties will be going up now.