Service tax to buy an apartment

Q: Is it necessary to pay Service tax to buy a flat in Virrar west Balaji Platinum

Rakshit, Mumbai

25th February 2014

Legal in Virar West, Mumbai

service tax

service tax and vat charges

service tax for an apartment

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Replies (5)

Hi Everybody,
My question to all.........Is Vat and Service Tax is applicable on ready-to-move-in property, single residential unit, independent house, villa, bungalow and low cost housing? Should builder issue two separate receipts for both VAT and Service Tax?

Keshavrao Jedhe, Pune

17th August 2015

Comment

He Keshav,
Really a good question and many of us don' t know about it.

VAT and Service Tax are not applicable on ready-to-move-in properties, single residential unit, independent house, villa, bungalow and low cost housing. For instance, if you have bought a property when it is almost ready-for possession, you must consider to postpone your sale agreement to be signed after completion certificate is issued. If you do so, then you will be saved from paying these charges.

Yes, Builder has to issue 2 separate payment receipts i.e. one each for VAT (with Tax Invoice no and TIN) and Service Tax (with Tax Invoice No and ST registration no).

Kishore Pathak, Mumbai

17th August 2015

@Khushisha,
A property is termed "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 service tax levied on the purchase of the property.

Yes, land cost is exempted from both these charges.

An exemption from payment of service tax on under construction property is allowed in case of the following cases: 1)Construction of single residential unit, 2) Construction of low cost houses up to carpet area of 60 sq.mt., 3) Single residential unit is defined as a self-contained residential unit designed to be used by one family only.

Abhishke Karule, Mumbai

17th August 2015

Comment

There is a very good article written on Service tax. You can read the article by clicking on this link: Service tax on under construction property in India

Rajiv,

25th February 2014

Comment

Service Tax and VAT is only for under construction property. But if you buy flat/ unit only after the builder obtains Certificate of Completion from the Competent Authority you need not have to pay any of them. In short purchase flat which is ready for possession..

Padma G, Mumbai

25th February 2014

Comment

Right Padma,
These 2 taxes are applicable only for an under-construction property. Service tax, as decided by the central government, is payable on services provided by the service provider. The service provider collects the tax from the consumer and deposits the same to the government.

Effective 1st June 2015, the service tax is currently 14% of the 25% of the total agreement value for properties below Rs 1 cr or 2000 sq-ft. area in size. For properties exceeding or equal to Rs 1 crore or more than 2000 sq-ft. area, the service tax is 14% of 30% of the total agreement value.

Abhinandsavalla, Mumbai

17th August 2015

From 1st July 2010, Payment of service tax on all under construction property has been made mandatory.

Kishore Pathak, Mumbai

25th February 2014

Comment

Hi Kishore,
So, what is really an under construction property? How to calculate service tax on under construction Property? Any exemption from payment of service tax on construction?

khushisha, Mumbai

17th August 2015