Real Estate and Laws in India

Dear readers as You all are aware that recently union government has announced the budget 2007. This budget definitly has some points for real eatate sector in the country.

Here are some excerpts from an interview of CNBC TV clarifying the present scenario of Indian real estate laws


What is the biggest challenge before the real estate?

Ashok Batra, service tax expert: The real estate industry has to bear the load of three types of taxes. The union government levies service tax. The government should withdraw service tax if it wants to give a fillip to this sector. The effective rate of tax should be reduced.

The real estate sector gives service tax at two stages. When the builder builds a house, he pays service tax on the bills of architects and those involved in the construction. Now he has to take service tax from those who buy his flats. The builder is treated as a contractor if the customer is buying a house during the period of construction.


Besides service tax, the industry pays two types of tax -- VAT and stamp duty -- levied by the state government. So the industry has to bear the load of three types of taxes.


What are buyers expecting from this budget?

Hitesh Oberoi, Director, 99acres.com: My site gets around 15 lakh hits from buyers each month. The market can’t satisfy their demand. They are primarily looking for low-cost housing in the range of Rs 15 to 25 lakh. It is hard to get a house in that price range.

These are major factors because of which the buyer is not willing to repose faith in the market. High stamp duty rates, absence of regulator and business professionals are some of the major factors why people are wary to enter the market. Buyers are not sure whether or not they will get the house for which they are paying.