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Karnataka vat on sale of constructed / ready-madeflat

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CA Bijay Shrestha

Never Give up....No matter what....

455 Points Posted on 20 January 2014

Dear Experts,

Generally VAT is applicable on Sale of property under Construction but regarding applicability of VAT on Sale of Completed Flat by the Builder, is VAT applicable on the same?

Could there be an argument that the sale of the immovable property (completed flat) is in the normal course of business therefore builder is allowed to collect VAT on the sale of completed Flat and remit the same to the revenue?

Generally the buyers are not ready to pay VAT on completed Flats.

Please kindly suggest with relevant sections and Case laws.

Replies (1)

RAJU

LEARNER

966 Points Posted on 21 January 2014

Where prospective enters into an agreement with the developer for construction of property, the transaction would be considered as Works Contract and the value of materials used thereon would be liable for VAT.

VAT is not liable on sale of immovable properties. Immovable properties do not fall within the definition of `goods`.

In case of sale of completed flat, there can be no liability.