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Big Tax Hit For Real Estate Companies

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September 27: The Supreme Court has delivered a big retrospective tax blow to real estate developers. Builders now have to pay 5% value-added tax from June 2006 onwards after the apex court upheld its judgement in the K Raheja case. The court says states can now levy sales tax on yet to be constructed flats as the building contracts are a species of ‘works contracts’. Bloomberg TV India details how this sets a legal precedent for companies and may result in more litigation.