Home prices will increase by about 2.5 percent with the implementation of service tax on the residential segment with effect from today, a leading property consultant said.
“The implementation of service tax on residential properties will result in an increase in the price of homes for end-consumers. Developers will justifiably be unwilling to absorb this new tax burden and naturally pass it onto the buyers,” Jones Lang LaSalle Meghraj senior vice-president for capital markets Gautam Hora said.
“The increase would be to the tune of 2.58 percent.
Following this, overall demand and sales of residential properties will take a significant hit in all cities,” Hora added.
In the budget 2010-11, Finance Minister Pranab Mukherjee had brought in real estate complexes under the ambit of service tax, unless the entire consideration for the property is paid after completion of construction.