VAT and Service tax calculation for apartment in bangalore

Q: Hi,

I have booked an apartment in Electronic city, Bangalore. The flat is under construction and will be available for possession during feb 2013. The builder has given us the cost break up which has Rs.2,62,000.00 as service tax and VAT on the property which cost Rs.32Lakhs (basic cost + car parking). Kindly clarify me, what is the calculation for service tax and vat? Also pls clarify me what is the need for two separate agreement, say sale agreement and construction agreement? Now my builder is telling me that he will be giving me only one agreement. Kindly advice me on this.

your clarification will be much helpful for me.
Kindly help me.

Thanks
Rona

Sathya Nallusamy,

21st September 2012

Legal in Bangalore

vat & service tax on new apartment in bangalore

vat & service tax on new apartment

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Replies (11)

It is really confusing to calculate service tax and VAT. Please provide me simpler method of calculation.

abhyudaya.s, Bangalore

13th May 2015

Comment

Service Tax is Calculated 12.3% of the 40% Portion of the Total Cost ex: Basic Cost = 30,00,000/- and other Charges is Say = 5,00,000/- so now 40% of 35,00,000/- is 14,00,000/- know apply 12.3% Service Tax on this Amount and for Vat it is 5% on Total Value , i,e = 35,00,000/- .

The Best way to Calculate Service Tax & Vat is 9.5% of Total Cost rather then confusing yourself

Vivek Kulkarni,

13th May 2015

How to calculate service tax on under construction Property ?

Gurmeet,

19th January 2015

Comment

When you buy a house, you pay for two components:

1) Value of land
2) Construction offered by the developer (service provider)

Service tax is payable only in case of construction services and not on the value of land. In cases where it becomes difficult to ascertain cost of immovable property and service cost separately, government has come up with the provision of abatement scheme where an amount is levied on the total amount.

Sreya Khan, Bangalore

19th January 2015

Do I have to pay service tax for a ready to move property?

Devank, Bangalore

20th November 2014

Comment

If you are going for a ready to move property, then you are not liable to pay service tax. :) :)

Srinivas Rao , Bangalore

20th November 2014

Can anyone provide me information on how to calculate the service with an example?

Nakul Sachdev, Bangalore

20th November 2014

Comment

For example: if the cost of a property, 1500 sq.feet large, is 40,00,000, then the service factor value becomes 12.36%*40,00,000 and the total service tax becomes 25% of the service factor value (.25*.1236*40,00,000= 1,23,600)

Venugopalan, Bangalore

20th November 2014

As as far i know VAT s 4% and Service tax is approx 5% of the total cost of the flat (Unit Price, Car Parking, Power/Water, Generator, Club etc whatever you pay to the builder). This doesnot include maintaince.

Vivek Kulkarni,

12th September 2013

Comment

Is the VAT and Service Tax applicable for new flats?

Nakul Sachdev, Bangalore

30th May 2014

For any under-construction property that is purchased within India is responsible to pay VAT and Service Tax.

Bharat Vasandana, Bangalore

30th May 2014

Sales Agreement is the agreement between buyer and seller before the actual sales happens.

Venugopalan, Bangalore

15th October 2014

A construction agreement is a contract between the builder and the buyer. It describes the rights, duties and obligations of both parties in their dealings with each other. It is important for both the construction contractor and buyer to sign this agreement before they perform any work.

Venugopalan, Bangalore

15th October 2014

Hi Manohar, I have purchased a property on Hosa Road Junction, Hosur Road, costing 39,25,000(including Car parking + amenties) + tax and Regn. My builder has given the quotation which says VAT and Service Tax @ 7.5% on total cost of the property. But you said it is 12.36% of the 25% of the basic cost. I am confused here, can you please clarify.

Regards,
Prashanth Bhat

Prashanth Bhat,

6th March 2013

Comment

Hey Srinivas, you should ask the builder to provide you a break up of all the charges on a written document.
For the payment of the service tax it is always advised to make a payment by check rather than cash, as it is accounted as white money and the white payments will be helpful for you from taxation point of view in future and when you will be planning to sell your property. Don't forget to ask your builder to provide you a receipt when you make him a payment by cheque.

Manohar,

5th March 2013

Comment

In the sales agreement the builder has clubbed the service tax and other reimbursement as one component, is it fine or shall I ask them to clearly indicate the amount of service tax I’m paying? Which is a better option to pay the service tax amount by cheque or cash?

Srinivas Rao , Bangalore

5th March 2013

Comment

As per my knowledge, the service tax is revised on April 2012 and now the service tax is 12.36% with no changes in the budget 2013-2014. The service tax is charged on the 25% of the base value of the flat/ apartment. For eg. If the base value of the flat you are looking to buy is 80L , in that case service tax will be charged on Rs 20L ( which is 25% of rs. 80 L). so 12.36 % if Rs 20 L will be Rs. 247300/-

Manohar,

5th March 2013

Comment

Hi Manohar, i went through the link but but it seems to be for last fiscal year..also article author did not try to give a crystal clear view on the process..what is that 33% to 25% roll back and when will you apply 12.36% and when will you apply 2.575% on what ......can you help us if you have knowledge on this subject..

Ravi, Apartment Resident

15th October 2012

Comment

Hi Sathya, I have seen an article regarding this in Commonfloor.. Please click Service Tax On Purchase of Under Construction Property to read the article and let me know if this helps..

Manohar, Bangalore

21st September 2012

Comment

Thanks Manohar for pointing to the use full link. The article you have mentioned above states as per budget 2010-2011. Is the same service tax applicable for this year as well?

Sathya Nallusamy,

21st September 2012