About Service Tax applicability on Flat purchase after Obtaining OC from SRA Dept

Q: In SRA Project's Salable Building (16 Flr) at Mahim, Mumbai 16. The OC is obtained from SRA Dept till 14 flrs and the flat is purchased on 8th Flr after Obtaining this OC from SRA. Then My question is - Is the service tax and VAT is Applicable or exempted?
- If applicable then why?
- If not applicable then what grounds?
Thanks.

Satyavrat Nanal,

18th March 2016

Property Tax in Mahim, Mumbai

service tax and vat in mumbai

service tax after obtaining oc

vat charges after obtaining oc

st & vat after obtaining oc

tax applicability on flat purchase after oc

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Replies (3)

Hi All,

Thanks for your inputs.

My query is, The project is under SRA Dept. and The OC is given by SRA Dept. I have consulted 5 tax consultants.
the query is about whether the SRA Dept fits under the "Competent Authority" term of Service Tax exemption rule.
3 Tax consultants say that SRA Dept OC is of NO use and BMC OC should be obtained to avoid paying Service TAX
But 2 Tax Consultants say that the Project Development Plan is under SRA Dept and SRA Gives the 1st OC on the basis of which BMC later on will issue their OC.\
According to them SRA Dept fits under The specifications of "Competent Authority" Term and This dept's OC is valid for the property to gain immovable property term. so Service tax and VAT is not applicable.
Hence now I am confused and seeking for the answer.

If any one can enlighten me about this then it would be of a great help.

Waiting for the positive reply.

Thanks
Dr. Satyavrat Nanal
+91-9892229523
+91-8454845088

Satyavrat Nanal,

22nd March 2016

Comment

Hi everybody,
And at the same time, a builder cannot charge Value Added Tax (VAT) on transaction for sale of flat effected after he has secured completion certificate for the project from the municipal corporation.

Rakshit, Mumbai

22nd March 2016

Comment

Yes, even i read in a notice issued by Brihanmumbai Municipal Corporation, It has been conveyed to the Service Tax Authorities in Mumbai that sale of flats where the the entire consideration in reserved after issue of Occupancy Certificate by BMC, leading to only transfer of title in immovable property, falls outside the definition "Service" provided in Section 65B (44) of the Finance Act, 1994, and is therefore, not taxable. (As per PIB - DSM/MA/AK - Release ID : 129959 dated 26th October, 2015).

Praveen Modi, Mumbai

22nd March 2016

Right Praveen,
As per best of my knowledge, if sale is executed when the property was under construction, VAT and service tax are payable. As per ruling of Honorable Supreme Court of India, the sale of under construction flat / property is liable to pay VAT. But it is not payable once the construction work is completed.

VAT is a state subject. Service Tax is paid to the central government. VAT and Service Tax are not applicable for Constructed Property. It is only applicable for under construction flat/property.

VAT may vary from state to state as it is state subject but service tax is uniform across country i.e. 14% % as it is fixed by Govt of India.

Arup rajan, Mumbai

22nd March 2016

Hi Satyavrat,
No service tax if OC has been obtained for the building. Even if you buy Ready-To-Move from builder, no Service Tax is applicable.

Praveen Modi, Mumbai

22nd March 2016

Comment

But Service Tax and VAT are applicable only if registration is done before CC /OC has been obtained. No breakup based on when the payment was made (to the best of my knowledge). In your case as date on CC is before you registered your agreement-no ST/VAT are applicable for you.

Arup rajan, Mumbai

22nd March 2016