The budget 2010-11 brought rude shocking and a lot of confusion to prospective home buyers. But don’t get too shocked, you won’t pay service tax on the entire amount. The budget has suggested 10 per cent service tax on construction. For the past one month, many city builders have been asking purchasers to start paying up the service tax. Buyers are shock and say they were not informed of the additional levy when they had booked the flats. As per the budget, the service tax will be charged on only those residential projects which are still under construction.
Under construction Property
It should be noted that the service tax would be levied only on under construction property. A property is considered “under construction” till the builder receives a “completion certificate” from the relevant authorities. If the entire amount for the property purchase is paid after the receipt of a completion certificate, there would be no levy of the service tax.
The obligation of paying service tax is on the builder. So, you would not have to go through the hassle of paying it. It is the duty of the builder to collect this service tax from the purchaser and deposit it with the department. However, ultimately this burden would be transferred to the home buyers in the form of higher price. This provision would be applicable from 1st April, 2010.
Abatement allowed
Budget 2010 brought a rude shock to prospective home buyers. But don’t get too shocked, you won’t pay service tax on the entire amount. Abatement scheme, under notification number 1/2006 dated March 1, 2006, says that the contractor is entitled to claim abatement to the extent of 67 per cent of the value of services rendered by him. Hence the net effect of the tax could be lesser than the 3.4 per cent, since construction attracts service tax only on 33 per cent of the value. Recently Finance Minister has rolled back Service Tax to 25% of the value.
No Service Tax on resale properties
Service Tax is applicable only on property under construction or where a completed building has not received its occupation certificate. As resale properties would essentially have obtained a completion certificate, this tax would not be applicable to resale properties. Service Tax would not be levied on parking lot. Many builders also sell parking space. It has been categorically mentioned in the budget that any amount paid for getting a parking slot allotted would not be subject to service tax.
Service tax rolled back
There was some relief for the real estate sector with the finance minister offering for partial roll back of service tax that was imposed on the sector during the budget. Finance minister has rolled back Service Tax to 25% from 33% in the April session when house discussed and passed the finance bill. Only days after the budget, ministries of urban development and housing had appealed to the finance ministry for a roll back of the proposed tax. According to analysts, the quantum of impact will not be very big. However, it might see developers shifting focus to affordable developments.
Service Tax on Preferential Location Services
The service tax has been levied on any amount spent by the builder for the development of the complex – like building internal roads, paving the garden, etc. Service tax of 10.3% has also been levied on any payment made by you to the builder for getting a preferential location for your house / flat.
- Any floor rise amount paid for getting an apartment on a higher floor
- Any amount paid to get an apartment / house with a specific number
- Any amount paid to get an apartment / house facing a specific amenity, say a swimming pool, lake, park, sea, etc
- Any amount paid to get an apartment / house facing a specific direction (maybe as per vaastu)
There is a false impression being created that 10 per cent service tax is levied on the entire value of the consideration which is paid to the builder / developer. Service tax is levied only on 33 per cent of the value. It should be noted that the service tax would be levied only on “under-construction property”. If the entire amount for the property purchase is paid after the receipt of a completion certificate, there would be no levy of the service tax. Service Tax would not be levied on parking lot and resale property. For those who have booked their flats some time back and paid amount based on the stage of the construction, the tax will only have to be paid on the remaining installments and not on the entire value of the flat.
Most of buyers buy a house through a home loan. They book the house when the builder launches the scheme or when it is under construction, and make the payments based on the stage of the construction. This means that they buyers make most of the payment before the builder gets the completion certificate. Thus, the entire amount paid by them to the builder would be subject to service tax. If the entire amount for the property purchase is paid after the receipt of a completion certificate, there would be no levy of the service tax.
Tags: Property Buying, resale properties, service tax, service tax on purchase of under construction property, Service tax only on 33 per cent, Service tax rolled back, under construction property
But I heard that this will be applicable on bookings after the notification. And notification will happen from 1st july of 2010. So people buying before that may not have to pay the service tax.
Service tax on under construction property will be levied now only on 25 percent of property value. Its levy will be from the date of notification i.e. July 2010.
hi,
Thanks for sharing info on service tax,
Please clarify us the following
1. I booked a flat last october (2009) and paid 90 % of the amount as on date, it is under construction. I got the intimation from the builder to pay the service tax. Is it applicable for me or only for those who will buy the flat after july 2010.
2. As you mentioned in your article, do i need to pay service tax only for the remaining i.e 10 % of the amount. ( I already paid 90% as on date, will be paying 5 + 5 in the coming months.)
3. How can I legally approach the builder if I am not eligible to pay the service tax.
Please clarify, It is very urgent,
Please reply to my mail id karthi.aish@gmail.com
Thanks
Karthik
Hi Karthik,
There is still a confusion among builders and buyers that whether service tax should be charged from April 1st or service tax only for buyers who booked after july 2010. But in your case if Service tax is applicable only after July 2010, you need not required to pay service tax and in case if service tax is applicable from April 1st, you need to pay only on 10 per cent.
You need not required to pay 10% service tax on remaining 10% of property price but you will be paying only 3.3% on remaining 10% of property price. As you have paid 90% of property price, you and builder can come in mutual understanding to pay the remaining 10% after getting completion certificate so you would be paying no service tax for the property.
Regards
Rakesh HP
Please clarify the Service tax for the case given below.
Cost of flat (Under construction) : 38 Lakhs
Amount paid by self : 15Lakhs (Full amount paid latest by 15th May’10)
Loan amount : 23Lakhs (Rs.19 Lakhs paid stagewise latest by 15th May’10)
Amount balance to be paid via Bank loan after completion of project by Aug 2010 : 4 lakhs
Question : Is there any service tax @3.3% on whole amount or 3.3% on Rs.4Lakhs balance amount to be paid after 31-05-2010.
Dear Parag,
The new law does not specifiy the source of income whether it is paid from own source or financed from bank. Whatever amount u have paid before the 1st july will be taxed.
If u pay remainin amount after the completion of your apartment (certificate from competent authority is must), then there won’t be any tax payable by you. Uf you remaining amount before completion then you will have to pay the tax @ 10.3 on 25% of BSP and 10.3 % on other charges.
Talk to your builder about this. Seems that there is some confusion on the account pf builders.
Cheers.
Hi,
I purchased a flat in Chennai (booked in 2008 and taken possession in March 2010) cost of the flat is 38 lakhs, 26 lakhs loan and 12 lakhs own contribution. I paid service tax of around 1.5 lakhs.
My flat is not in Metro limit. It is in the outskirts.
Please clarify me, whether I need to pay service tax, if not how can I get refund of the same. Explain me in detail.
Things are still not clear. Somewhere I read that bookings after 1st july 2010 are eligible for service tax. Some say its effective from the date budget is passed by the house, i.e sometime in april 2010 when finace minister rolled back the consideration value from 33% to 25% of the cost of property. So we need to pay 10.3% service tax on the 25% of the total cost.
I think the article is a old one. It says construction attracts service tax only on 33 per cent of the value whereas Finance minister has rolled back this to 25% from 33% in the April session when house discussed and passed the finace bill.
I would like to request the author to update the document so that buyers dont confuse.
Also does anybody has knowledge when the ministry is going to issue the notification for this service tax.
@Subhendu: Thank you for giving updated information on service tax. Article has been updated by including “Service tax rolled back to 25%”. Thank you for your support and feedback
Thanks very much.
Still no notification/circular has been issued in this regard by the Minsitry of Finance (dept of Revenue). Check the site http://www.servicetax.gov.in/servtax_notfns_idx.htm (for 2010).
Notification/circular has to be issued with a effective date for the specified service tax. Mere declaration in the budget does not attract service tax to be collected. If any builder is asking for this, just ask him to show the notification/circular issued by the Ministry(if any).
Till then enjoy !!
Seems the Govt of India has made the notifications.. Can some one come back with the actual facts on who is now covered under the new service tax rates and i also see it is effective from July 1st.
So does that mean,
Booked after July 1st?
Registered after July 1st?
Hand over after July 1st?
Can some one shed more light on this one please..
Rgds
Siva
I don’t know why we indians don’t protest against these tax impositions on basic necessities….We pay so much of tax but we don’t have any protection from the govt….Suppose your builder leaves project halfway then…??? Is our govt going to get our money back..? lets think about it
sevicE tax on PLC IS PAYBLELE ON COMPLETED BUILDING ALSO AFTER 1/7/2020 /
SEVICE TAX PAYABLE ON PLC ON WHICH AMOUNT IN WHOLE OR ONLY ON 25 % OF PLC?
Amount PAID TO BUILDER During CONSTRUCTUION OR AFTER CC ON ACOUNT OF TANSFTER CHAGER ie changed of name is liable to sevice if yes under which sections
from which date sevice is payable on paymet made to builder on purchase on under constuctuin fltas
I M CONSULTING WITH A BIG DEVELOPER OF SURAT PLEASE GIVE ME DETAILS ABOUT DATE OF APPLICABILITY OF SERVICE TAX ON CONSTRUCTION ACTIVITY & HOW ITS APPLY ON NEW BOOKING OR OLD BOOKING.
REGARDS
CA AMUL NADA
PARTNER
A B B & CO.
CHARTERED ACCOUNTANTS
SURAT
MOB-99098-89184
the service tax on under construction property would be charged from 1st July, 2010 i.e. from Today as per Notification No. 28/2010 dt 22/06/2010 of Service Tax department
i think it would be cleared to you
hi,i belongs to a middle class faimly,our faimly (including me) were planned to buy a new 2BHK flat in mumbai,its difficult to buy closer area in mumbai,we were very much interested in western mumbai,due to higher rates of properties we’ve switched to resale flats,now here also the problem is the same because of 1 july 10% tax news,and its indirectly effected those properties too,now we’d like to know that in this situation when a middle class faimly want to have their own house in such a big city what should they do to take a right move and not to compromise…..(if any one have any idea,where we can buy or where in mumbai [not so far]please let us know,its really a hard time to believe for faimlies like us in big cities.
thankyou…!!
hi,i belongs to a middle class faimly,our faimly (including me) were planned to buy a new 2BHK flat in mumbai,its difficult to buy closer area in mumbai,we were very much interested in western mumbai,due to higher rates of properties we’ve switched to resale flats,now here also the problem is the same because of 1 july 10% tax news,and its indirectly effected those properties too,now we’d like to know that in this situation when a middle class faimly want to have their own house in such a big city what should they do to take a right move and not to compromise…..(if any one have any idea,where we can buy or where in mumbai [not so far]please let us know,its really a hard time to believe for faimlies like us in big cities.
thankyou…!!
From 1st July 2010, Service tax is applicable for under construction property and not for resale flats or apartments. It should be noted that the service tax would be levied only on under construction property and a property is considered “under construction” till the builder receives a “completion certificate”. As resale properties would essentially have obtained a completion certificate, Service tax would not be applicable to resale properties.
Thank you…!!
For better idea, You can refer these links.
http://www.taxguru.in/service-tax/service-tax-on-builder-amendments-made-by-the-finance-act-2010-as-made-effective-from-1st-july-2010.html
http://www.taxguru.in/service-tax/faq-on-service-tax-on-construction-of-residential-commercial-premises.html
What I understood from the taxguru site is that, all the transactions paid after 1st july 2010 will attract service tax.
2.3 What implications it can have?
Any payment received by the builder on and from 1st July, 2010 onwards will be subject to ST.
You may calculate your service tax based on the balance to be paid to the builder. (if already into agreement before 1st july 2010)
Service Tax = 25% * 10.3% * (Remaining amount).
Enjoy !!
Hi,
My relative is purchasing a flat in Bangalore and the total cost is 37 Lacs including Car parking, deposits and aminities. The builder had asked us to pay VAT & Service tax each @ 4% on the basic cost + car parking amount. The sale agreement was executed on 26/06/10. Could you clarify the following :
1. whether both the VAT & Service TAX is leviable or not?
2. What will be amount tobe paid as Service Tax, as through your article I came to know it’s 25% on the total building cost.
Hi Experts,
Can you please reply me on my query regarding Service Tax on Booked Flat Unit
I have booked flat on 15th Dec.2009 and value of flat is Rs.31.35 Lakh.I have paid Rs.4.30 Lakh thru Self and 23.70 thru Bank loan. Remaining amount i have to pay while taking passassion and that is 3.35 Lakh.. on which amount should i have to pay service Tax?
On above price i have to parking charges,maintanance deposite charges,advance maintanance, Munciple connection charges,electricity charges and Dastavej Charges which costs me around Rs.4.00 lakh. Please advice should i have to pay service tax on this amount also? If yes, then how much?
Regards
Jignesh Shah
Please clarify the Service tax for the case given below.
- I booked a flat in May 2010 (Booking amount paid on 6th May 2010 & aggrement made on 29th May 2010.
- Cost of flat (Under construction) : 16 Lakhs
- Possesion date : July 2010 End (tentative)
- Amount paid by self : 2.8 Lakhs
- Loan amount : 12.50 Lakhs (paid on 29th June 2010)
- Balace amount – approx 90 thousand will be paid at the time of possesion.
Question : Is there any service tax needs to be paid in above case.
i am an accountant of a realites. we constructing 23×3=69 flat by sub contractor and sale them 25 lacs to 30 lacs. we started booking flats from october 2009 till date construction is running and 50% complete. we charged to service tax to our clients/customer/buyer.
but some clients/customer/buyer says that they will not liable to pay service tax. but we already service tax paid on about 7lacs. so please clarify that we are charged service tax to our clients/buyers or not.
if not then which amount we paid to central excise department as service tax should be refundable and what wibe process to get refund from central excise department
Hello,
Sir, recently i have purchased a residential plot in UIT approved Town Ship in Rajasthan.
My payment plan is installment , i want to know about my rest payment wether it could change because i heard about the new policy regarding service tax .
Is it napplicable in my case.
Waiting for your kind reply.
Regards
Arvind
Dear Sir,
I boobed a flat in Bangalore in the month of oct 2009.
Since it is under construction stage only 80% amount is dispursed.
Please let me clarfy I need to pay any service tax.
If yes how much %.
also builder is asking me to pay 4.12 % on flat cost.
Please clarfy how to go about ????
Dear Sir
I purchased a flat in Faridabad under construction linked payment plan (CLIP) under Home Loan. Till 31st March, 10, i have already paid 85% of the propert value to the builder and they are about to handover the project by Dec 10 to Jan 11.
Please advice whether i ve to pay Service Tax on the entire amount or only on the balance 15% which is due to the builder.
Hello Sir
I had completed my flat registration in may 2010, and now builder is asking for 3% extra tax amoun t for each and every loan payment amount hence onwords …
Please let us know if this is correct or not.
Regards
Shivraj
no need to pay if your registration is over before 1 st july 2010
Hi Bharat
Can I get some doccument on this which I can show to Builder as a proof.
Thanks
Shivraj
I Purchase flat in March 2009. The building is in under construction and we will get position in coming one month. I pay 90% to the builder. but not builder is insisting me to make a Fix Deposit of 1.2 Lac for VAT amount.
my question is what is government rule for vat? according to me government still have to apply this rule then what i do further?
even about service tax on remaining amount. In agreement Builder is committed me to give flat before 31st march 2010 . now he is delayed due to his own region still i have to give service tax on remain amount?
I am purchasing a resale flat which is 6 months old, The flat is costing 56 Lacs + Stamp duty + registration+ Transfer charges.The seller has still not received a completion certificate from the developer.I have following questions :
1) Do i have to pay service tax ?as the completion cerificate is still not provided by the developer.
2) If yes, do i have to pay on 56 Lacs or addition of stamp duty, registration and transfer charges?
Regards
Shrikant
Please give the clarification of what type of Service Tax percentage Charged on Flat purchase under construction.
Hi Hippargi,
Normally service tax will collected like following
Total Value * 25% 8 10.3% = Service Tax
Regards
Nagendra AS
Advocate
9164001353
Hi Nagendra,
Please correct me if I am wrong but I think the service tax calculation should be (construction cost * 25%) * 10.3% and not total cost *25%*10.3%
Thanks,
Nik
I booked a flat in Chennai -OMR -IT Corridor in 2006 end ,I took possession in 2009.I have paid 12.36% service tax on 33% construction cost.Now the builder is asking service tax for other heads like Legals and documents,Car park, Maintenance ,Electricity deposit, Water connection and so.on.Does all these attract service tax @ 12.3% .Whether car park attracts service tax.Service tax is charged on VAT also .Please clarify.
pls help out by clearing my dout, we have booked our house in Dec 2009, and already paid 80% of the amount, now the builder is saying to pay 4% service tax. Are we liable to pay him this amt? its urgent
Hello..!!
Can someone please clarify few below doubts that i have, i think i have been charged by my builder uneccesarily.
I booked the flat in Oct-2008 and till 1st July-2010 i only have remaining amount of 6lacks pending that needs to be paid to the builder, Do i have to pay Service TAX on only remaining 6lacks or + on previous paid amount too ..???, Other charges are apart which i have to pay 1,50k at the possession time.
Hi, Prakash,
Any building statred before April 2011 is not liable to pay service tax, kindly check with finance advisor for the same.
Regards
Nagendra AS
Advocate
[...] budget 2010-11 had imposed 10 per cent service tax on under construction property. The property is considered “under construction” till the [...]
I havedone the booking for 28 lacs in june 2010.paid 10%,do i need to pay 3.4% service tax
I stay at Hyderabad and hav booked a 1500 sqft flat from a property dealer in Oct 2007. They said they wud hand it over to me in 2 years but now its been 3 years. flat is almost completed and now i hav to pay the last installment( 1.5 lakh) and start up with registration.
until last month he said only i hav to pay VAT but now he is asking me to pay VAT(1%) + Service tax(3%)
Do i hav to pay both VAT n Service tax. Is their any govt order issued.
Do i hav also hav to register the car parking area.( i hav already paid him car parking amt 40,000). When i will be paying for flat registration then why should i pay seprate amt for car parking registration.
pls reply to me asap. I will registering the flat this month only.
thank u
Please clarify the Service tax for the case given below.
- I booked a flat in APR 2009 (Booking amount paid on APR 2009 & aggrement made on JULY 2010
- Cost of flat (Under construction) : 7 Lakhs
- Possesion date : JUN 2010 End (tentative)
- Amount paid : 5.25 Lakhs
- Balace amount – approx 1.75 Lakhs will be paid .
Question : Is there any service tax needs to be paid in above case.
Waiting for your kind reply.
Please clarify the Service tax for the case given below.
- I booked a Flat in June 2010 (Booking amount paid on 21st June 2010 & aggrement made on 26st June 2010).
- Building Complete Certificate : Before 1st July 2010
- Cost of Flat : 35 Lacs
- Possession date : Possession Already Starts /Aug. 2010 (tentative)
- Amount paid by self : 8 Lakhs Before 1st July 2010
- Loan amount : 27 Lakhs (paid on 7th July 2010)
Question : Is there any service tax needs to be paid in above case.
SIR,
I have purchase a flat on dt :26/08/10 ,which will be given possession by 2012 (Aug). I have paid full amount 22 lacs . Now they have charge me 2.575% service Tax on full amount . Please tell me can i save my service tax Or can i get some discount on the service tax.
SIR,
I have booked a independent buglow on dt :14/01/10 ,which will be given possession by 2013. my builder give me allotment letter on registration date of property 13/07/2010. my loan saction on 25/05/2010. MY Ist Disbursement via bank to Builder is on 26/06/2010.I have total paid 25% amount of 27 lacs i.e 6.75 Lacs up to 13/07/2010. please clearify some question?
1) Service tax liable to paid on independent buglow?
2) Is to be paid service tax on independent buglow booked before july-2010?
3) if applicable how much tax to pay?
thanks & regards
R. P. Athole
I have booked the flat in May 2009. The registration done in May 2009 for the amount of 32.11 lacks . Total amount paid up to Oct 09 is 27.80 lacks. Now in Nov 10 builder is giving possesion. How much service tax & vat I should pay
SIR
I have booked a flat on aug 2009 for Rs 2300000, for which I hav paid Rs 2000000 in the month of sept 2009
builder has received occpuancy certificate in the month of April 2010
by which i hav paid 200000 in the month of aug 2010, stil 100000 to pay.
now builder askin me to pay service tax on entire amt, which comes around 78,200
kindly clarify how much tax I hav to Pay
@sujit
Please use this simple formula to calculate your TAX –>
Total Value * 25% * 10.3% = Service Tax
Note : Remember” all the transactions paid after 1st july 2010 will attract service tax. ”
and also once the Occupancy certificate is recevied , which is ofcourse comes after Completion Certificate there willl be “No TAX” on the amount paid afterwords.
so sujit in your case there is no service tax involved at all.
I have made this view based on the previous post.
for further clarification you can visit TAX guru site as well.
I have purchased a resale flat vide registration dated 30.09.2010 for 46 lacs from the 1st puchaser who has taken it from the builder in 2007. The Occupation certificate from CIDCO has been received prior to my registration of agreement of sale. Please advise on applicability of service tax and vat in this RESALE case as Possesion is yet to be given (Likely from November 2010 ) and builder is asking for the bank gurantee for the tentative vat & service tax amount. In case ST & VAT is to be paid who should pay it me or the first puchaser who bought the flat from the builder and what will be the applicable amount and rate. I am yet to make the full payment to the investor (sellor) who bought the flat from the builder.
Dear Sir,
I booked an apartment in OMR , Chennai, for an amount of Rs.60 lacs, out ;of which 90% of the amount has been paid before November 2009. the balance is only Rs.6 lacs apprx. there is a confusion between the builder and myself regarding payment of service tax.
The registration has also been completed in April 2010. Now the service tax is applicable only for the remaining 10% or i have to pay the service tax for the entire amount?
I would really appreciate if you clarify the payment of service tax as the service tax is applicable only for the payments made from July 2010.
Awaiting your response A.S.A.P.
Thanking you,
Best Regards
S.Chakrapani.
Dear Sir,
I have booked a 2 BHK house in 2006 and details are as below
Area Kharghar – Navi Mumbai
Builder M/s Arihant Universal
Flat 2 BHK
Agreement Value 29.8 Lacs
Booked on Dec’2006
All Payments Cleared by Jan’10
Initially Builder has asked a bank Guarantee for 1% of value of Agreement ( i.e. Rs 29.8K for three years) for provisional VAT on flat, I submitted that along with Society Corpus fund as well 2 years Maintenance charges on 10th Oct’10 and was promised to provide the possession letter with one week.
However when I visited last on 24rth Oct’10 to collect possession letter , he asked for bank Guarantee for additional 4% of value of Agreement, stating a new notification from Government for 5% VAT applicable on flats sold between 2006 – 2010.
Kindly help me understand the new VAT rules applicable on my flat in Kharghar.
Warm Regards
may i know the building where u bought the flat and who from the company had confirmed that 5 % vat is payable for sale made between 2006 -10 . the contention of the builder is neither apt not valid and must be protested at appropriate consumer forums.
Dear Mr. Garg,
I came across this post on Common Floor. I too have a similar experience with Arihant Universal, asking for a bank guarantee for 5% of the agreement value. What has happened in you case?
Hi Vijay,
Builder is asking me also to create a Bank Guarantee for VAT & Service Tax of 5%, Could you please advise me, How did you manage to get this Bank Guarantee? If possible, please help me with your contact number to discuss on this.
regards,
Dinesh
unnecessary burden for the house buyers should not be paid by the buyers. why dont this government fixed a tax on income for 40% rather than to loot medical,house under construction,commodities and etc.
i booked my flat in Nov/Dec 09 and agreement made on 03.06.10 . I read in one article that book under construction flat before july to avoid service tax , means if you have already booked your flat under construction scheme before july , you need not to pay service tax .
while my builder is charging service tax from us , this will give additional buden of Rs.60000/- which we not planned .
Pl provide expert comment on this
@alok the service tax on under construction property would be charged from 1st July, 2010 i.e, any payment made towards purchase of under-construction property after july 1, will attract service tax. A property is considered “under construction” till the builder receives a “completion certificate” from the relevant authorities.
Thank you
Regards
Rakesh
in your question box, filled with full of questions and NOT the reply for their querries. only a few replies (in old site) for question even i can name it from the web site. when they expect some guidlines, pls help atleast a week/ 10 days if not immediately.
sujit says:
October 3, 2010 at 2:23 am
SIR
I have booked a flat on aug 2009 for Rs 2300000, for which I hav paid Rs 2000000 in the month of sept 2009
builder has received occpuancy certificate in the month of April 2010
by which i hav paid 200000 in the month of aug 2010, stil 100000 to pay.
now builder askin me to pay service tax on entire amt, which comes around 78,200
kindly clarify how much tax I hav to Pay
Reply
ane says:
October 18, 2010 at 12:51 pm
@sujit
Please use this simple formula to calculate your TAX –>
Total Value * 25% * 10.3% = Service Tax
Note : Remember” all the transactions paid after 1st july 2010 will attract service tax. ”
and also once the Occupancy certificate is recevied , which is ofcourse comes after Completion Certificate there willl be “No TAX” on the amount paid afterwords.
so sujit in your case there is no service tax involved at all.
I have made this view based on the previous post.
for further clarification you can visit TAX guru site as well.
Mr.prakash says:
July 20, 2010 at 7:18 am
Hello..!!
Can someone please clarify few below doubts that i have, i think i have been charged by my builder uneccesarily.
I booked the flat in Oct-2008 and till 1st July-2010 i only have remaining amount of 6lacks pending that needs to be paid to the builder, Do i have to pay Service TAX on only remaining 6lacks or + on previous paid amount too ..???, Other charges are apart which i have to pay 1,50k at the possession time.
Reply
Nagendra AS says:
July 21, 2010 at 12:42 pm
Hi, Prakash,
Any building statred before April 2011 is not liable to pay service tax, kindly check with finance advisor for the same.
Regards
Nagendra AS
Advocate
The VAT and Service tax is paid to whom Central Govt or State Govt.
1. Basis cost
2. BWSSB
3. Parking
4 Amenities
The VAT and ST is paid on what all elements listed above.
Do we get/Should we get reciept for the taxes paid to the Govt through builder?
When should we pay VAT and ST to builder, at the time of possession or booking?
Is there a chance VAT and ST can further be changed in this year?
Please advice
Thanks
Hi,
Does it mean that the builder is liable to pay service tax only on the amount he receives from buyers after receiving the completion certificate?
This may be one of the reasons that the builders try to sell all the flats before finishing the construction..
Service tax is applicable for amount paid for buying under-construction property. If you are buying property having completion certificate, there is no service tax, therefore buying resale property is also not having any service tax.
Thank you
Can anyone please specify that whether is there any service tax on property below the price of 20 lakkh?
Thanks.
The low-cost housing segment (property worth less than Rs. 20 lakh) will be exempt from service tax when the same is rendered as part of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awaas Yojana. Therefore all the transactions for property under construction paid after 1st july 2010 will attract service tax.
Thank you
Thanks Rakesh.
Dear Rakesh,
Your Both statements are contradicting…Do u mean to say that IF “The low-cost housing segment (property worth less than Rs. 20 lakh) will be exempt from service tax when the same is rendered as part of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awaas Yojana.” THERE WILL BE NO SERVICE TAX? BECAUSE I have booked a flat in one such scheme,& my agreement value is 15 lacs..please revert…
Hi Visharad,
The service tax is exempted when the same is rendered as part of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Rajiv Awaas Yojana (for property worth less than Rs. 20 lakh).
Thank you
Regards
Rakesh
Hi Rakesh,
can you please let me know is that rule for service tax and VAT on under construction property has been finalised now? if yes, what would be the rate and on what amount and what is the cut off date… if its on stay order then from which website we can refer that…. pls help…
I have purchased a flat in month of feb.2010. Till date I have paid 95 % of the total amount to the builder. Balance 5% is to be paid. whether I shall pay service tax on entire 5% amount, as the amount include Car parking charges or shall I deduct the parking amount from the 5% and pay the balance amount. Whether service tax is applicable for MSEB connection and Maintenance Charges also, which has to be paid to the builder during the position of flat.
Thanks.
If I have booked a under construction flat ,Can i get tax exemption on booking amount of flat .
pls advise if service tax and vat on new property is appicable now as there was a stay order
Hi Raju,
Even I am looking for that answer, as there was stay on service tax on under construction property…
Team,
Any update on that please…
There is stay on service tax by Bombay High Court.
By when this decision will be freezed any idea? also till that time should we pay to builders or should we wait till final order, i guess builder can not force us till the final decision right!!! please guide me..
I m also looking ffor this info. pls. guide if anyone have this info
Please let us know whether high court decision came for service tax applicability.
My builder is asking for the payment, on which im not sure whether to pay or not?
Any idea of the high court decision or still there is stay on decision ?
Hello,
I have purchased under construction a flat in Rahatani pune in 16 march2010. at the time of buying there was no descussion made on service tax from builder. now he is asking for service tax. kindly guide me what to do? the possession is due by JAN 2010.
The property value is of 16.72 Lac. I paid 5.72000 DOWN PAYMENT and 11,00,000 IS THE LOAN AMOUNT BUT stagewise payment will pay from the loan.
My agreement is made in 3-5-2010.
First PAYMENT IS 7 ,64,200 which cheque/DD has Date is 28-6-2010 that is in june but my builder gives me receipt for that amount on date 8-7-2010.
Seond PAYMENT IS 1,50,000 which cheque/DD has Date is 9-8-2010 that is in jaug but my builder gives me receipt for that amount on date 12-8-2010.
Last payment is remaining that is 1,85,800 .
My flat is 100% ready. I have not collect the completion certificate from the builder.
Builder says that Rs.28,200 is service tax for my flat.
He gives me TWO option ,to pay Service Tax
1.My builder says that he collect money form me for Service tax but he gives Receipt of that Money but do not mention in that receipt Rs.28,200 this money is for Service tax ONLY GIVES RECEIPT.
OR
2. he says that he gives a letter pad in that he mention that He collect Service Tax form me but do not mention how much money he get from me.
If there any doctments to show to the my builder .pls send me.
Pls Advice me
I am confused.
Thank U.
Please clarify the Service tax & VAT for the case given below.
- I booked a flat in September 2009 (Booking amount paid on 2nd September 2009 & aggrement made on 18th December 2009.
- Cost of flat (Under construction) : 20.5 Lakhs
- Possesion date : August 2010 End (tentative),till date no posession
- Amount paid by self : 5 Lakhs
- Loan amount : 15 Lakhs (paid on 30th October 2010)
- Balance amount – approx 50 thousand will be paid at the time of possesion.
Question : Is there any service tax & VAT needs to be paid in above case.
Please clarify, It is very urgent,please reply me on my mail I.D santu182@yahoo.com
Reply
As per my knowladge,any payments made to builder post 1st July’2010 will attract service tax of 2.575%.
I have purchsed a flat in Pune, Maharashtra. Sales deed was done in dec 2009 and it was registered in January 2010. Flat is near completion & now builder is asking for 1 % VAT amount . As far as I have read, 1% VAT is applicable ONLY in cases where property was registered after 1st April 2010.
I am aware that my sales deed is NOT eligible for VAT. How should I make my point to builder ? Please give me a proof like URL for central or state tax dept circular or notification. Thanks.
Simply tell him that you have confirmed the same from PBAP- Promoters and builders association Pune.
sir,
I have booked the flat which is under construction on september 2009 cost rupees 1905446and paid rupees 100000 during bookingand during agreement rupees 185817
I have appliedfor loan it wiil be getting on this month but builder charging rupees 68000 as service tax.so I want to know What is the rate of service tax and how much Ihave to pay?
Regards
Rajkumar