Service tax on purchase of ready building

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Peter (Querist)
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05 February 2012 Dear Sir,

A small Commercial Complex with Shops on Ground floor and office space on upper floors is physically ready with all final touch-up (no construction work going on at all) OC is expected in next couple of weeks as per builder, water supply is also there may be as this is a redevelopment of old building in Mumbai.

If I enter a purchase agreement with builder now with current date, am I liable to pay Service Tax and VAT? (have paid some amount to Developer last year but no purchase agreement)

As per my knowledge Service Tax and VAT is payable on only purchase agreement for under construction project.

Is new Building awaiting OC is treated as under construction?

Also when you pay Service Tax and VAT for purchase of property, do you get Tax receipts from Government in your personal (purchaser) name with property description like Shop No.?

Thanks in advance !!

Nishant

Nishant (Expert)
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06 February 2012 Peter,

As per the Service Tax and VAT laws, any property is under construction property unless the OC of the same is available.

Hence any agreement executed with the current date will make you face with ST and VAT compliances.

Morever it is worthwhile to be noted that service tax and vat is applicable even if the agreement is executed post OC availablilty if any sum of the agreed value is paid before the availability of the same.

Tax paid receipts are in the name of the payee, hence the tax receipts will be in the name of builder and not yours

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