Q:Hello, I had purchased a flat in Indore last year in June-2015. As the building is under construction The builder is charging me Service Tax of 3.5% on the total agreement value.Now the property is constructed & at the time of registration, builder is asking for 5% VAT on the total agreement value. My question is VAT amount is calculated on the total construction cost of my alloted area (as in this case 1190 sqft) & not on the Total agreement value of selling? Also he is not providing me with the receipt of the VAT charges applicable.Also can you clear me with the current registry charges + any other charges applicable at time of registry?The builder is asking for 8.5% of the total agreement value, but i think the registration is done on the market value not agreement value?
Latest Answer: Hi Rumit,
For any sale to attract VAT, it should involve transfer of goods from one person to another. In case of under-construction properties, its the transfer of ownership rights from the developer to buyer in the form of a sale agreement, in select states. This tax is governed under the ‘works contract’ in the VAT law. For instance, VAT is charged at the rate of 1% of agreement value in Mumbai and Pune and 5% in Bangalore, but there is no VAT levied for apartments purchased in Noida-NCR, Chennai, and Kolkata.
