R. Ramabhadran Pillai

High tax rates a cause of worry for builders in the State

Industry status sought for construction sector

A slowdown will render many jobless

KOCHI: Many are apprehensive about the meltdown in the U.S. percolating to many countries, including India. But the builders in Kerala are more worried about issues within the State rather than any external influence, even while they acknowledge that the US crisis is cause for further discomfiture.

Soaring inflation and the subsequent hike in the interest rates have hit the sector hard.

Though these are issues faced by the construction sector across the country, there are specific issues that cause unease to it in Kerala.

Taxes galore

More than 30 per cent of the expenditure in the sector in the State arises from taxation, says M.D. Jayaraj, president of Kerala Builders Association. Apartment builders have to pay service tax and labour welfare cess, apart from VAT.

The registration fees and stamp duty are in addition to it. There is even a tax on the stores and handling of materials. The one-time building tax applicable to an apartment is 10 times that of a house of the same area. This is because the apartment complex is considered as a single unit for calculating the rate and hence it falls in a much higher slab.

“The builder has to make payment to the Pollution Control Board, depending on the cost of the projects, even though the Board is not offering any service,” he told The Hindu.

To complicate matters, the builder has to approach the Pollution Control Board through consultants for setting up sewage treatment plant. The lack of a comprehensive housing policy is contributing to several anomalies, according to him.

The construction sector employs the maximum number of uneducated labour, points out Sani Francis, a builder and vice-president of the association. The collapse of the sector will not bode well for employment scenario. It will also result in revenue loss to the government. The sector needs special consideration as it is part of the infrastructure development. It should be accorded the status of an industry, he said.

If the government fails to give due concessions, there will be a slowdown in the construction activity.

Prices will go up, taking houses beyond the reach of ordinary people. The price rise always affected the middle class, he noted.

Work on about 40,000 apartments is in progress in Kochi, according to his estimate. At least thrice that number of flats is being built across the State.

A slowdown would mean that the gap between demand and supply of housing would widen further, he said.