Service tax on Property

[munaj inamdar]

Sir,

I had booked my flat in Nov. 2009, and paid the instalments as demanded by builder.

But at the time of last instalment on June 2011, he demanded service tax & Vat on agreement cost to get the possession.

So my query is whether ST & VAT payable, if yes then on what amount coz during booking of flat no ST & VAT applicable at that time.

He had not yet get the completion certifiacte.

Any way to escape that taxation.

Thanking U

Munaj Inamdar

[satish nair]

Dear mr inamdar

Builders were brought into service tax wef 01.07.2010.

If you have booked a flat before this date then you are not liable to pay service tax on payments made BEFORE THIS DATE.

But you have to pay service tax on installments paid after the above date.

The builder gets a deduction of 75% and therefore the effective rate of service tax  is 2.5%

rgds

CA Satish Nar

[GANESH KANCHAN]

Dear Mr Inamdar

 

Service tax is applicable on builders w.e.f.01.07.2010. Accordingly service tax is applicable on payment made after 01.07.2010 towards cost of flat (inlcuding registration and stamp duty @10.3% of 25% of property/flat value. Effective rate 2.575%.

Regards

 

CA Ganesh B Kanchan

AI Summary

Service tax on builder payments applies to instalments paid after the implementation date; pre-implementation payments remain outside liability.
Service tax applies to builders from 01.07.2010; instalments paid before that date are not taxable while instalments paid after that date are liable. Builders apply a 75% abatement reducing the effective service tax burden (practitioner-cited effective rates noted). Taxable value discussions include whether registration, stamp duty and VAT components form part of the agreement value for calculating the tax.