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Service Tax in the Housing Sector Lowered

The Indian Government on 29 April 2010 lowered service tax in the housing sector to 2.57 per cent of an apartment's cost, against the 3.3 per cent proposed in the Union Budget 2010-11. The Finance Ministry declared that it would exempt service tax for low-cost housing schemes under the Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awas Yojana.

Oct 19, 2010 15:46 IST
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The Indian Government on 29 April 2010 lowered service tax in the housing sector to 2.57 per cent of an apartment's cost, against the 3.3 per cent proposed in the Union Budget 2010-11. The Finance Ministry declared that it would exempt service tax for low-cost housing schemes under the Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awas Yojana. The gross value (including value of land) for service tax on construction service was enhanced from 67 to 75%. Service tax would now be computed on the remaining 25% of the house price leading to 2.57% effective tax. The calculations imply that an additional Rs 77000 would have to be shelled for a flat booked for Rs 3 lakh.