Bengaluru:(IANS) Real estate prices will never fall given the various taxes and guideline prices levied on property development, said a leading real estate player here.
“Almost 35 to 40 percent of a property cost is loaded with taxes. Stamp duty, service tax, tax, VAT and excise duty,” said Prestige Group CMD Irfan Razack on the sidelines of the seventh National Association of Realtors (NAR) – India convention on Saturday.
“If the government is really serious about housing for all, it should classify houses on size rather than on the price or ticket size and exempt houses below 50 square meters from all taxes,” he said, responding to Reserve Bank of India Governor Raghuram Rajan’s observations that unless prices fall, the unsold real estate inventory will not get sold.
He suggested that the government should levy less taxes on properties in the range of 50-100 square metres and apply market rates and taxes to houses beyond 100 square metres as they are afforded by well-off people.
Razack highlighted that guideline values of land is being hiked by 35-40 percent every year by state governments in all the cities, leaving no option for the developers and realtors but to pass on the cost to the customer.
“Once the guideline value gets revised upwards, you know the law, anybody who sells a property below the guideline value will have to pay the difference of stamp duty as far as the state government is concerned and also have to pay the income tax for the differential,” he said.
“If property prices have to drop, land prices have to drop, if you are increasing the guideline value of the land, which land owner will sell the property less than the land value, please tell me? If he does sell, he loses out both ways,” Razack said.
Razack suggested a meeting of realtors and property developers with the RBI governor and the government to come up with better policies for the public good.
He also said that many people do not have sanitary living conditions and housing, which is resulting in the rise of anti-social elements and other unwanted problems.