Service tax and VAT over years

Q: I have booked a flat in 2012 and over years I have been paying the installment. I see the service Tax amount has changed and will changer after April 2016 again, Can someone provide me the details of service tax over years for property above and below 1 Cr.I also need to know about VAT. Are we suppose to pay VAT on every installment.

I would have prefer that government have a official website for this.

Shashi,

6th March 2016

Property Tax in Mumbai

vat in maharashtra

property tax in mumbai

service tax and vat in mumbai

service tax in maharashtra

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Replies (3)

Thanks for all the inputs, but I doubts if the current service tax rate for property above 1 Cr is 3.71, as I feel this was increased in November 2015 and again in this Budget. So looking for table which state the same. I don't want to give up additional amount in the name of tax,

Shashi,

10th March 2016

Comment

As per change in percentage in service tax in 2015-16, for the purpose of calculation, 25% of the gross value of an under-construction unit with value less than Rs.1 crore is considered to be the cost of construction, and service tax is applied on this. Properties valuing more than Rs.1 crore attract service tax of 30% of the gross value.

Harmeet Kaur,

9th March 2016

Comment

Yes, and it will directly increase the property cost of the buyers. Increase in service tax will result in 0.7-0.9% net increase in cost of a property for a home buyer. The effective rate on the entire value of a property below Rs.1 crore is 3.09% (12.36% on 25% of property value) and for a property above Rs.1 crore, the effective rate on the entire value of the property is 3.71% (12.36% on 30% of property value). Hope, i cleared your doubts.

Miraniyatin, Mumbai

9th March 2016

Hi,
Service tax is payable only after handing over the possession of the property in question. In budget 2015-16, it was proposed that a homebuyer will pay a service tax of 14% while buying a property that’s under construction instead of the current 12.36%.

Rakshit, Mumbai

9th March 2016

Comment

Rakshit is right. Service tax is applicable on almost all services that a consumer avails, including buying an under-construction property. This is so because, in case of an under-construction property, the developer is deemed to be the provider of construction services to the homebuyer, and hence service tax is charged on the cost of construction. It is not charged on the entire value of the property but only to the extent of cost of construction. This means that cost of land is excluded.

Anuj Gupta, Mumbai

9th March 2016

Hi Sashi,
VAT is charged at the rate of 1% of agreement value in Mumbai and Pune. Pouints to remember that Service tax is payable only on property purchase directly from developers and is not required in case of resale property purchase as there is no service provided.

Siddharth Rana, Pune

9th March 2016