Applicability and Calculation of ST and VAT on Purchase of a Villa

[SASI CHATLA]

Dear Sir/ Madam,

I have bought a Villa in the Year 2014 with a booking advance and later paid installments in Year 2015 and 2016 [ bank loan].

During possession, the builder has raised ST as 15% on 30% of AOS

VAT as 5% on 25% of AOS.

Please let me know whether ST is applicable for Villa and if so should it be applied on AOS ?

Should the land value be deducted from AOS and apply ST?

Also, ST if applied should be 14% for 2014 and 14.5 for 2015 and 15% for 2016 [since 1st June].

Please advise, how to pay or negotiate on this.

Thanks in advance.

Regards,

Sasi

[KASTURI SETHI]

Yes. ST is applicable on Villa. This is covered under Notification No.26/12-ST dated 20.6.12 as amended vide Notification No.8/16-ST dated 1.3.16 (Serial No.12 refers). 70 % abatement (earlier 75%) is in lieu of value of land. So no deduction of value of land is permitted separately.

AI Summary

Service tax applicability on villa purchases: abatement governs taxable value and precludes separate land deduction. Applicability of Service Tax to villa purchase is affirmed; a 70% abatement under the cited notification governs computation of taxable value and operates in lieu of any separate deduction for land value, so buyers should not separately deduct land from the assessable value where the abatement is applied by the builder. The reply does not address VAT calculation or retrospective rate mechanics.