Tax implications for sale of flats by builders

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Manasa Suraparaju (Querist)
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04 March 2015 Hello,

Can any one please let me know what would be the tax implications on sale of flats by builders after obtaining certificate of completion from a competent authority and the entire consideration for sale is received after obtaining such completion certificate..?

Will it be treated as sale of stock in trade?

what tax liabilities arise to such builder on such sale?

Before obtaining completion certificate the builder is liable to pay Sales Tax along with service tax and VAT?

Thanks and Regards,
Manasa.

Rajesh Sharma

Rajesh Sharma (Expert)
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04 March 2015 Hi,

Levy of VAT is a state specific thing kindly specify which state the sale of flats is happening in case of sale before obtaining Completion certificate.

With regard to Levy of service tax in case the sale of flats happens after obtaining certificate of completion from Local Authorities competent to issue the same, the same is not chargeable to tax.

In case of sale before obtaining completion certificate the service tax rate will be 3.09 (3.5) / 3.71(4.2). The figure in bracket are revised service tax rate to be applicable from notified date.

In the state of Maharashtra composition VAT rate is applicable @1% on the value of flat or stamp duty value whichever is higher.

Regards

Rajesh Sharma

+91 99 205 345 95

Manasa Suraparaju

Manasa Suraparaju (Querist)
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05 March 2015 Thank You Rajesh Sharma.
Telangana VAT law is relevant in this case.
Will the sale made after obtaining completion certificate is treated as sale of stock in trade sale and chargeable to tax as business income in the hands of builder?

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