Kindly Advise about Payment of Service Tax while purchase a New Flat.

Q: I have purchased a Property in Kamothe,Navi Mumbai in November 2010. At that time nothing about Service Tax was discussed . Now The Builder insists that the service tax amount be paid to them before possession. As per my knowledge the case of service tax is still in the court. Should the amount be paid to the builder at this point of time or directly to the government when the judgement is passed in future.Is it legal to give a cheque for this purpose in the name of the builder? If paid Now to the builder, will I be provided with a proof of payment? Please Clarify .

ajaikumarnair73, Apartment Resident

16th September 2011

Legal in Mumbai

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As per budget 2010, 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. No service tax if entire payment for the property is paid by the buyer after completion of the construction including certification by the local authorities. The property buyers have to shell out an extra for payment made for purchase of property from July 1, 2010. Read more on http://www.commonfloor.com/articles/amendment-in-service-tax-for-under-construction-property-1753.html