After the retailers, it is time for the realtors to condemn Kerala’s State Budget for 2008-09 as, according to them, it is a big blow to the construction sector.
The Confederation of Real Estate Developers’ Associations of India (CREDAI) said in a statement that as per the budget proposals, the VAT compounding rate for contractors having no registration under central sales tax (CST) would go up to three per cent from two per cent as of now, while the rate for those with CST registration would double to eight per cent from the existing four per cent.
As most of the materials for construction have to be brought in from outside the state, the contractors will have to pay up 8.08 per cent compounded VAT.
The higher rate, as per the federation, will result in an additional VAT burden of Rs 80 to Rs 150 per square foot. At the same time, the construction sector has been struggling in the wake of the recent increase in the prices of construction materials like steel and cement.
All these, in other words, would inversely affect the consumer. The federation said that if one constructs or buys a house worth Rs 25 lakh, he or she has to pay Rs 7 lakh to the government under these heads. Again, if the entire amount is taken as loan from financial institutions, the customer will end up paying Rs 14 lakh as levies and the interest thereon.