SERVICE TAX ON UNDER CONSTRUCTION FLATS

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CA AYUSH WADHWA (Querist)
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05 October 2010 PLEASE GUIDE ME WHETHER SERVICE TAX WOULD BE CHARGED ON UNDER CONST FLATS IF SOLD TO SOME ONE AND ALSO IF FULLY CONSTRUCTED FLATS ARE SOLD TO SOME ONE ALSO I AM CONFUSED IF WCT IS APPLICABLE ON BUILDER THEN THE WCT REGISTRATION IS TO BE DONE UNDER VAT OR SERVICE TAX...?

Shyam Lal Naik

Shyam Lal Naik (Expert)
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05 October 2010 Service tax is applicable on receipts against flats for which completion certificate is not obtained prior to such receipt.

For fully constructed flats, for which completion certificate has been obtained, receipts are not taxable.

The Works contract of construction is taxable both under the state VAT laws as well as Service Tax Laws. You need to take registration under both.

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CA AYUSH WADHWA

CA AYUSH WADHWA (Querist)
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05 October 2010 but sir when vat is not applicable on sale of immovable property why i need to register under vat for wct also tell me whether vat is chargeable on construction material bricks , tmt bars etc ???

Shyam Lal Naik

Shyam Lal Naik (Expert)
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07 October 2010 It is true that VAT is not applicable on sale of immovable property.

However, transfer of goods(bricks etc. as mentioned by you) involved in the execution in the works contract is treated as sale for the purpose of VAT under clause 29A of article 366 of the Constitution.

In view of the above, works contract is a deemed sale for the purpose of VAT laws.

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CA AYUSH WADHWA

CA AYUSH WADHWA (Querist)
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07 October 2010 sir thanks a lot!!

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