Realty prices may go up

Real estate prices may go up with a plea of Urban Development Ministry for withdrawal of 2.5 per cent service tax from the sector not being heeded to by the Finance Ministry.

The Budget for 2010-11 proposed a service tax of 2.5 per cent on all under-construction projects in the real estate sector. The Urban Development Ministry,however,wanted to get the tax revoked on the plea that the sector was still to recover from the economic slowdown which it witnessed two years ago.

Urban Development Minister S Jaipal Reddy had on April 15 met Finance Minister Pranab Mukherjee and sought the removal of the service tax.

In the meeting,Reddy had said that the sector was going through a difficult phase and the service tax could hurt its interests as also that of the middle class families.