VAT and service tax on extra room in redeveloped property

Q: I am V Srivastava from Mumbai n have flat in malad west.. my building went under redevelopment in 2007. registration of the flat was done in november 2008. pl tell me if even on redevelopment of building(I have taken one room extra and i had to pay for that about Rs 1500000/), I have to pay VAT @5% of the total agreement cost along with penalty and interest for delay in VAT and Service tax. the delay of payment was done even by the builder. they infomed me just about 15 days back about this. pl inform and clarify my doubt on VAT. There was same rate for the new buyers too.

vishwanath srivastava,

10th March 2013

Legal in Mumbai

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I am Pravin from Mumbai. I have flat in Andheri (W). My Building is under redevelopment. I have taken additional 100 sq.ft. carpet area and the total cost of which is Rs. 13,75,000/-. Against total cost I have paid 50% amount i.e. Rs. 6,87,500/- in three installment dt. 10/2/2013 , 9/5/2013, 30/12/2013 to the developer. Please advice me the rate of service tax and vat I have to pay to developer and on which amount i.e on total amount OR on paid amount.

PRAVIN DALVI,

9th December 2015

Comment

Service tax is 2.58% of the Agreement Value and VAT is 1% on all the residential properties purchased on or after April 1, 2010..

Ravi Waghmare, Mumbai

12th March 2013

Comment

VAT is payable on the sale of under-construction flats. It is mandatory for all buyers to pay. Service tax is payable by builder on collection/advances received from the buyers & the VAT is needed to be payable at the time of registration of the said property. If the above two amount is pending or paid late then there shall be a penalty along with the interest on the late payments.

Suraj Kalled, Pune

12th March 2013

Comment

According to the rules, the Builder is considered a dealer in the under-construction project as he buys material from a supplier and after using them in process, sells his goods i.e. the flat to the buyer. With tax payable on the material bought, the Builder can claim set-off for the tax already paid while making the purchase.

Sunil Joshi, Mumbai

12th March 2013

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