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.

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