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Arundhati Raychaudhuri (no designation)     13 January 2014

Service tax

do we have to pay service tax while purchasing a flat? if yes, how do we derive the value of taxable service on which service tax will be paid?



 6 Replies

vidya shetty

vidya shetty (senior accountant)     14 January 2014

Service tax on Flat is not payable if all total flat amount is paid after the date of completion certificate. If its paid before the date of completion then total value of flat is taxable.

Service tax on flat is taxable on receipt basis only.

Therefore the value of taxable service on which service tax will be paid is the payment made for flat installment.

1 Like
Manoj Agarwal

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com)     16 January 2014

In simple words, when we purchase flat under construction from anyone, and normally some booking amount is paid, then there is levy of service tax. Otherwise, say when we purchase a ready flat from anyone including builder, then there is no service tax on it. The consideration paid or payable, in cash or kind, shall be the value on which service tax shall be calculated.

Ajay Raghatate

Ajay Raghatate (Sr Executive (Excise & Accounts))     17 January 2014

Dear Sir,

On purchasesing Flat, we have to pay Service tax OR VAT ?

Thanks

 

 

CA Ratnesh Dutta

CA Ratnesh Dutta (Chartered Accountant)     17 January 2014

Originally posted by : Ajay Raghatate
Dear Sir,

On purchasesing Flat, we have to pay Service tax OR VAT ?

Thanks

 

 

Dear Ajay,

Flat is an immovable property which is not  "goods" hence, VAT is not applicable if immovable property is purchased after issue of completion certificate. However, if any property is purchsed from real estate builders then it fall within the ambit of service tax act under declared services if such property is under construction (i.e completion certificate not issued against such property by authority).

Builder charges Service Tax on 25/30% of the value of property & car parking (i.e. 3.09%) and charges 12.36% on miscelleneous receipts (eg. PLC charged, Club membership etc.)

 

I hope this will clarify ur concern.

 

CA Ratnesh Dutta

CA Ratnesh Dutta (Chartered Accountant)     17 January 2014

Originally posted by : Ajay Raghatate
Dear Sir,

On purchasesing Flat, we have to pay Service tax OR VAT ?

Thanks

 

 

Dear Ajay,

Flat is an immovable property which is not  "goods" hence, VAT is not applicable if immovable property is purchased after issue of completion certificate. However, if any property is purchsed from real estate builders then it fall within the ambit of service tax act under declared services if such property is under construction (i.e completion certificate not issued against such property by authority).

Builder charges Service Tax on 25/30% of the value of property & car parking (i.e. 3.09%) and charges 12.36% on miscelleneous receipts (eg. PLC charged, Club membership etc.)

 

I hope this will clarify ur concern.

 

Thank You

Ajay Raghatate

Ajay Raghatate (Sr Executive (Excise & Accounts))     17 January 2014

Thanks Datta Sir,

I have confused about this case. My friend had purchased flat, and he had paid only VAT. 

On above explanation posted you and other experts, following observations are correct ? 

 1. If we purchase under constructed flat then we are liable to pay Service tax on 25% of flat value.

2. If we purchase flat after receipt of completion certificate, (Ready Flat)-Exempt from serviceTax

3. If we purchase Under constructed flat but Area of flat below 60 Sq Mtr and under 20 Lacs - Exempt from Service tax.

4. In Maharashtra, every buyer have to pay 1% VAT on Sale value.

Thanks

 

 


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