Rentals of Indian commercial properties are expected to rise by 10 per cent after the Budget today proposed to bring all lease agreement of shopping complexes, malls and vacant lands under the ambit of service tax.

Besides, development of real estate complexes will also attract service tax, unless the entire consideration for the property is paid after the completion of construction.

“This step will add to the cost and it will be a huge burden on owners. Rentals of Indian commercial property will go up by 10 per cent and it will lead to inflationary pressure,” apex realty body Credai resident director GP Savlani told PTI.

Global realty consultant Jones Lang LaSalle Meghraj (JLLM ) country head Anuj Puri also said rentals of office and retail space are likely to increase by 10 per cent.

The Finance Minister said all commercial agreements or contracts between lessor and lessee for rent and lease would come under the service tax net with retrospective effect from June 2007. It will also apply to all agreements for undertaking construction of building or structures on any vacant land for commercial use.

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Tags: 2010 union budget, Indian commercial property, Indian commercial property service tax

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