Service tax and vat on ready to movein flat in hyderabad

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MMReddy

23 Points Posted on 17 June 2014

I stay in Hyderabad. I have purchased a flat which is mortgaged to GHMC and the builder can register the flat on my name only after it is released from mortgage.I have few queries on Service Tax and VAT that I need to pay to the builder. Appreciate if someone help to understand about these.

The Agreement of Sale Value is 34 Lakhs and Sale Deed Value is 20 Lakhs for the flat. I have paid an amount of 4.5 lakhs as booking amount before the occupancy certificate is issued.

While searching over the internet, I found that “No service tax on ready to move in flat after obtaining the occupancy certificate”.As the flat under purchase is mortgaged to GHMC, builder can only register it on my name only after the occupancy certificate is issued.In this case, Do I need to pay the service tax as the builder is insisting me to pay?
If I need to pay the service tax then Do I need to pay it on agreement of sale value or sale deed value?

Please let me know the applicability of VAT in these cases. Thanks in advance.

Best Regards

MMReddy

Replies (2)

Arpit parakh

CA Final Student

39 Points Posted on 17 June 2014

Originally posted by : MMReddy
	I stay in Hyderabad. I have purchased a flat which is mortgaged to GHMC and the builder can register the flat on my name only after it is released from mortgage.I have few queries on Service Tax and VAT that I need to pay to the builder. Appreciate if someone help to understand about these. The Agreement of Sale Value is 34 Lakhs and Sale Deed Value is 20 Lakhs for the flat. I have paid an amount of 4.5 lakhs as booking amount before the occupancy certificate is issued. While searching over the internet, I found that “No service tax on ready to move in flat after obtaining the occupancy certificate”.As the flat under purchase is mortgaged to GHMC, builder can only register it on my name only after the occupancy certificate is issued.In this case, Do I need to pay the service tax as the builder is insisting me to pay? If I need to pay the service tax then Do I need to pay it on agreement of sale value or sale deed value? Please let me know the applicability of VAT in these cases. Thanks in advance. Best Regards MMReddy

In my opinion, the Service tax will be charged on the Sale value.As per the declared service u/s 66E, all the entire consideration received before the completion certificate issued by the competent authority is chargable to tax.

If the CC is issued then the same will not be chargable to ST.

MMReddy

23 Points Posted on 18 June 2014

Originally posted by : Arpit parakh
	In my opinion, the Service tax will be charged on the Sale value.As per the declared service u/s 66E, all the entire consideration received before the completion certificate issued by the competent authority is chargable to tax. If the CC is issued then the same will not be chargable to ST.

Hi Arpit,

Thanks verymuch for the response. If I understood your statement correctly, I would be required to pay the service tax for the amount of 4.5 Lakhs only as I have made this payment before the occupancy certificate is issued. Correct me if my understanding is wrong.

Best Regards

MMReddy