Trade resents 2 hike in service tax

CHENNAI: The real estate sector welcomed the Union government’s move to allow external commercial borrowing (ECB) for affordable housing, but felt the budget failed to meet their expectations.Confederation of Real Estate Developers’ Associations of India said the increase in service tax and excise duty rate is bound to increase the input costs thereby leading to increase in the cost of buying real estate.CREDAI president T Chitty Babu told Express that the increase in service tax and excise duty does not bode well for the realty sector.However, he did welcome the government’s move to allow ECB for affordable housing.“The government could have certainly increased the exemption limit on interest paid for housing loans. The government has also been silent on pushing reforms and introduce policies to increase housing stock,” he added.Jone Lang LaSalle said the one per cent tax rebate for home loans of up to Rs 15 lakh on homes costing up to Rs 25 lakh will prove beneficial for developers in this segment.K K Raman, executive vicepresident of DLF Southern Homes said this will result in a boom in low-cost housing in tier-II cities.Anuj Puri, chairman and country head, Jones Lang LaSalle India said the increase in the service tax rate from 10 per cent to 12 per cent will increase the cost of production for developers, who are already reeling under high input costs. It follows that this increased burden will be passed on to end users.