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Indian Property Developers Vs Finance Minister

Comments Off on Indian Property Developers Vs Finance Minister   |   March 5, 2007    01:54pm   |Contributed by Indian Realty News

Indian Property Developers are highly disappointed with the provisions laid in the budget. They have raised a clamour against higher taxation, seeking a rollback of the service tax levy of 12.36 per cent on firms that rent out immovable property.

The Confederation of Real Estate Developers Association of India (Credai) has decided to call a meeting with the finance minister, P. Chidambaram on Monday, March 05, 2007, asking to withdraw the levy.

However, the Indian real estate developers are not likely to get much solace with such a move as the Mr. Chidambaram seems to be in no mood to make any amendments in the new rules unless there is huge political pressure to do so. This is why; they have decided to take the assistance of legal people as they could exploit to make the levy untenable.

Since the commercial buildings stand on land, we can challenge the incidence of service tax. We are in the process of collecting further information, says Raj Menda, national secretary, Credai, who was in the city for a foundation stone laying ceremony of his company RMZ Corp’s joint venture project.

The real estate developers in India are turning the things in their benefit by twisting the actual scenario which does not demand them to pay tax on lease rentals but on the service provided by firms that lease out immovable property, says Narayan Jain, a senior tax consultant. The distinction is important as the load have to be borne by the service provider rather than the individual paying lease rentals.

Any act can be challenged in the court and termed as an ultra vires transactions, acts or enactments by corporations in excess of their chartered or statutory rights. Raj Menda, whose company RMZ Corp, is getting calls from IT clients who are anxious about their investments made in commercial sector.

In cities like Mumbai, rents can increase to Rs 40 per sq ft from the current Rs 30 per sq ft say property consultants and developers.

The lawyers are gathering the information on a similar case including issues like service tax, central tax over state tax (land tax). One of the state courts released out the rule which says, “Central tax could not be imposed over and above the existing land tax levied by the state on which the hoarding stands.”

News Published Under:   Real Estate Developers | Comments Off on Indian Property Developers Vs Finance Minister