How to insure an under construction apartment?

Q: My apartment is under construction. Can I insure my apartment while it is under construction?

Priyanka Vats, Pune

30th September 2011

Other in Pune

insure an under construction

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Replies (3)

Thanks all, I want to know what is the tax Exemptions does buyer gets while purchasing property?

Rohit Marathi, Pune

17th November 2015

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1. If the completion certificate has been issued, then service tax and VAT will not be payable as the property will not be considered an under-construction property.
2. Low cost housing where the carpet area is less than 60 sq m or 646 sq ft is exempt from payment of service tax.

Pravakar Saxena, Pune

17th November 2015

Hello , I would be happy If anyone tell me what extra additional charges should be levied with under construct property?

Rohit Marathi, Pune

17th November 2015

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Today, most of the buyer choose under-construction properties to take the advantages such as lower cost and greater customisation freedom but many buyers does not know that under construct property has various hidden cost and lots of risk involved till completion of the project. Service tax and VAT which form an essential part of the cost while buying an under-construction property.

Pravakar Saxena, Pune

17th November 2015

Service Tax is a tax levied by the Central government on provision of any services. In the context of under-construction properties, builders and developers are considered to be the provider of services and hence service tax is charged.

Krishnendu, Pune

17th November 2015

Thanks Krishnendu for your suggestion but I don't think there are any hidden charges? do you agree with me.

Rohit Marathi, Pune

17th November 2015

Hello Rohit,
I do not agree with you, Service tax is not charged on the entire value of the property but only on the cost of construction, which means that the cost of land is excluded for the purpose of calculation of service tax. Service tax is also applicable on additional facilities such as preferential location and club membership.

Krishnendu, Pune

17th November 2015

Thanks Krishnendu, what about VAT charges? do you know more about this charges?

Rohit Marathi, Pune

17th November 2015

VAT is payable to state government, the rate varies from one state to another while service tax is charged at the same rate throughout the nation.

Tax and investment expert, Subhash Lakhotia, explains that though the effective rate of service tax is 14.5 per cent, after including the Swacch Bharat Cess, the calculation differs depending on the value of the property.

Krishnendu, Pune

17th November 2015

You cannot insure an individual apartment when it is under construction since it is part of the entire building structure. While a building is under construction, it should ideally be covered under a project insurance policy taken by the builder.This would be in place until the construction is completed as per the approved plan. After the completion of the project, either individual flat owners or all of them together, as a society, can buy the insurance cover.

Srinivas , Chennai

30th September 2011

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