Rates of Houses, Apartments to Go Up from April

Come April and people planning
to buy houses or apartments will have to pay more as real estate
developers are likely to pass on the additional burden of non-extension
of the income tax benefits under Section 80IB (10) from the next
month.

As per the rules of Section
80IB (10), residential projects approved before March 31, 2007,
will be able to avail the income tax exemptions but not those
that were sanctioned after it.

According to real estate
developers, the price per square feet of nearly all new apartments
sanctioned after March 2007 may rise by nearly 5-10 percent. While
many said the rise in rates will depend on various factors and
from developers to developers.

All those apartments in Mumbai
and Delhi with a built-up area of less than 1,000 sq ft are eligible
for the benefits under Section 80IB (10), while in other cities,
those with a built-up area of less than 1,500 sq ft are eligible.

Developers also added that
apart from the tax, the rates of construction materials like cement,
clinker and steel have also shot up leaving them with no option
but to raise the property rates.

Supporting the move to raise
the price, Confederation of Real Estate Developer’s Associations
of India, governing board member, Pradip Kumar Chopra, said, all
these private equity investors, including foreign direct investments,
who are flocking to the Indian real estate because of an assured
return by the developers.

But, Since after March 31
developers profits will be taxed hence investors return will also
get taxed indirectly. In that case, investors will shy away from
Indian real estate that Indian real estate industry couldn’t afford.
So, they will make up that loss from the public. While, sources
from banks, involved in house loans, too confirmed that real estate
rates will further go northward.