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Realtors Hoping For Service Tax Relief on Leased Property
The norms for leasing the commercial property may get relaxed including the reduction of some tax burden, says finance ministry. The decision may be pursued with a deduction of about 25% from rents for repair and maintenance work while evaluating the base value for tax.
The Central Board of Exercise and Customs is soon to issue a notification regarding the same.
The budget for the current fiscal unveiled by the finance minister P. Chidambaram has introduced a proposal to levy service tax of 12.8% on rental or immovable property used for commercial lendings. However, it has not put forward any norms for residential property or vacant land for agriculture, lands to be utilized for sports related activities, entertainment venues, car parking, and immovable property for educational or religious use.
The industrial sector refuses to look upon leasing of property as a service and criticizes the Finmin regarding its stand. Despite all, no modification was done in the norm and, therefore be brought in the ambit of service tax.
The move is likely to affect corporates, banks, multinationals, retail sector, restaurants, BPOs, IT companies and multiplexes as they generally prefer to lease property to set up their establishments.
The new stand of Finmin has also filled the heart of real estate agents with sadness as they feel the move would only push rents which are a crushing combination of lack of commercial space and property boom.
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