Service charge and vat on flat

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rajesh

consultant

21 Points Posted on 05 December 2011

Hi All,

I have purchased a flat for 2211490 (1510 @ 1299/SFT+2.50 Amenities) and got it registered in March 2010 when flat was under construction by paying an amount of 60K. Sale deed for registration says the flat cost as 4.2 lakh and construction agreement of 6.7 lakhs.

Now builder is asking me to pay another 85k towards the service tax and VAT ( @ 1% and 3.42 % of Flat Cost).

Flat Falls under juristriction of Greater Hyderabad Municipality (Andhra Pradesh)

Do we really need to pay this much bulk amount as Service Tax & Vat?, Please provide your valuable inputs .

Regards,

Rajesh

Replies (2)

Rohan

Consultant

111 Points Posted on 05 December 2011

Hi Rajesh,

Applicability of Service Tax is unavoidable w.e.f 1/7/2010. The "Deeming Provision Notification" came into effect from 1st July 2010, which clearly states that any amount received prior to issuance of Building Usage / Completion Certificate shall be liable to attract Service Tax.

In your case, you can argue that all the amount paid before 1/7/2010 shall not be chargeable.

Next if Service Tax needs to be paid on Construction Services. Ask your Builder how is he charging Service Tax. It seems he is charging you at the full rate @ 10.3% (ALERT)

Here you'll have to see under what head builder is charing you Service Tax.

Opt for Composition Scheme at either 2.575% of the agreement value which includes the value of Land or 3.14% of agreement value without the value of the land.

Remember you have to pay tax only on the White portion (on record value) ;-)

Sri

Self

22 Points Posted on 04 December 2012

Hello,

I have a plot in Hyderabad around 10 km from Hitec city area. I want to give this plot to a builder on sharing of flats basis. I would like to know if I need to pay any VAT, Servie Tax or any other taxes, on my portion of the flats?

Thank you