The Central Board of Excise and Customs the apex indirect taxes body, has issued new norms that restrict lower service tax to only those houses that cost below Rs 1 crore and have carpet area less than 2000 square feet.
Service tax at the rate of 12% will be applicable on 25% of the total value of the residential unit (effectively 3%) on properties that meet these conditions.
If a housing unit is either more than 2000 square feet carpet area or costs over Rs 1 crore then the tax will be levied on 30% of the total value, says the CBEC notification, raising the effective tax to 3.6%.
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