This new service will now be brought under the tax net apart from the usual services provided by real estate agents and consultants such as sale, purchase and leasing of land. This clarification was one among the many issued by the ministry pertaining to a recent announcement of levy of service tax on 12 categories.

The Real Estate Agents Association of India in July this year submitted a memorandum to the finance ministry to exempt the real estate sector from an additional tax burden since the markets are down and properties sales are slack. But, the memorandum was ignored by the ministry.

Goldstar Properties' M Balachandran says: "This is inevitable for the service industry, which is growing at aphenomenal rate. The worldwide forecast on service tax is that it will become equivalent to the excise tax."

He adds: "The advantage in an excise tax is that it is absorbed into the price of the product and the customers are not aware of the additional tax burden. The very nature of the service tax is that it should be levied and collected."

Uday Mathur of Chesterton Megharaj says: "The additional service tax, if it is unacceptable to the clients concerned, would have to be absorbed into our own profits. This way, the tax is certainly going to affect our bottomlines. But, generally clients who come for market surveys and other related studies are not going to curtail their expenses due to this additional tax."