Apartment buyers face tax burden

Vijayawada: Middle class families, who dream to own an apartment in cities like Vijayawada or Guntur, are struggling to pay the taxes being collected by the Central and State governments. The apartment flat rates have already reached the highest level in the capital region of Vijayawada and Guntur in recent years due to increasing prices of cement, sand, iron, hardware, sanitary ware, wood and labour cost.

Highlights:

• Middle class buyers struggling to pay service tax, VAT, stamp duty etc
• Sky rocketing building material prices trigger hike in flat rates
• Common man awaits sops from the Central government in GST

There is no need to mention that the land prices skyrocketed in these two districts after bifurcation of the state. All these factors led to escalation of construction cost in the last three years. Ultimately, the buyer has to bear the burden of these taxes and construction cost. Nearly 1,000 flats are nearly completed and are ready for sale in and around the city, but its sale is crippled due to high rates in and around the city.

Owing an apartment has become a big challenging task for the common man. Double bed room flats are being sold between Rs 30 lakh and Rs.50 lakh depending on the area, size and amenities provided. The three-bed room flats are being sold between Rs 50 lakh and Rs 1 crore.

The taxes being paid by the customers to the State and Central governments became a burden in recent years. The Central government is collecting 4.5 per cent service tax on the registration value of the flat. If a person purchases a flat with registration value of Rs 25 lakh, he has to pay Rs 1,12,500 service tax to the Central government. The state government is collecting VAT at 1.25 per cent on the registration value.

The state government is collecting stamp duty of 7.5 per cent on the registration value of the property either land or flat. The stamp duty costs Rs 1, 87, 500. The customers have to pay transformer charges, electricity charges, drainage connection charges, labour cess and the list goes on. These charges depend on the agreement reached by the builder and the customer, who purchases a flat.

In this backdrop, lakhs of people and realtors are eagerly waiting that the Central government may announce some sops to the common people who will buy flats or construct a house after GST comes into effect from July 2017. The Central Government will implemenst GST to maintain uniform tax policy and avoid double taxes. People and builders are eagerly waiting for the announcement of the GST and sops to be given to customers who dream of purchasing a house.

Capital Region Builders Association (CRBA) general secretary B Amarnath said the builders and people had been struggling a lot due to increasing prices of cement, sand and iron. He said the Central government should announce sops to the people. He felt the taxes being collected by the government are also very high and they should be slashed.

Confederation of Real Estate Developers Association (CREDAI) State General secretary Ch Sudhakar told The Hans India that the builders are struggling to continue the construction activity due to increasing prices of building material and taxes. He hoped the Central government will give some concessions to boost the construction activity in the GST. SBI Vijayawada regional manager Garikapati Venkat said that the SBI is offering the lowest home loan interest rates in the country to give a big boost to construction activity.

By Md AMEEN