VAT AND SERVICE TAX ON PURCHASE OF FLAT

This query is : Resolved

Faiz Ahmed Bachnak (Querist)
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04 November 2008 MY BROTHER BOOKED A FLAT TWO YEAR AGO IN UNDER CONSTRUCTION BLDG. CONSTRUCTION WORK WAS NOT STARTED THAT TIME. IT HAS 6 FLATS AND 2 SHOPS. CONSTRUCTION IS COMPLETED NOW. BUILDERS IS NOW ASKING FOR 5% VAT AND 4.5% SERVICE TAX ON AGREEMENT VALUE. CANT WE TAKE POSSESSION WITHOUT PAYING THIS AMOUNT AS WE WERE NOT AWARE ABOUT THIS AT THE TIME OF BOOKING FLAT AND MAKING AGRREEMENT. PLS TELL ME IS HE RIGHT

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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05 November 2008 It depends upon the terms and conditions of contract. We have to know the clauses relating to payment etc., to answer this query.

Faiz Ahmed Bachnak

Faiz Ahmed Bachnak (Querist)
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05 November 2008 right now i dont have agreement copy with me. As far as payment terms concern the consideration was payable as per the percentage of work completed. We already paid registration fee and stamp duty more than seven month back. He is asking for development charges and legal fee also that also we were not aware. He is not ready to give possession before receiving these payments including taxes. Pls help. Thanks for your reply

Faiz Ahmed Bachnak

Faiz Ahmed Bachnak (Querist)
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06 November 2008 Pls help

rowans1

rowans1 (Expert)
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21 November 2008 As of now, both VAT and Service Tax are applicable on residential flats.
VAT-
Applicable as per a composition rate (in Andhra Pradesh) on the building agreement. But department is (incorrectly) demanding VAT on land component of the agreement also.
VAT is applicable as per local State Law. It differs from state to state

Service Tax-
Applicable for complexes having more than 12 residential units at a composition rate of 4%+ EC/SHEC = 4.12%.
Since there are less than 12 residential flats, service tax is not applicable

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