Service tax and vat on under construction property

Hi

If u registered the property as fully finished then the tax rate 3.09% on entire sale consideration (exluding the amenities etc).
 

if you registered the property as semi finished then the tax rate on sale deed value at 3.09% and 4.944% tax  on construction agreement value.

   To know the liability under VAT and ST Actsyou should arrive at the construction cost. The total cost paid for a flat includes land cost (30%), charges for amenities and payments to agencies like MSEB,Waterboard,registration,security etc. (10-15%)As seen normally these exempt items( from both VAT and ST) form around 50-55% of the total price. The construction cost does not exceed Rs1.2 to 1.5 lakhs per 100 sq ft area of a flat. On the construction cost 4% VAT is applicable under composition scheme. Most of the builders go by composition scheme only. Similarly,a composite scheme is possible under ST Act. @ 4.12%.Othrwise VAT is applicable @ 12.5% on around 60%(material cost)(70% in many states)and  ST @ 12.36% on 40% of the construction cost  You may insist on the builder to give the break up of  the price .The builder has to issue an invoice to collect both VAT and ST as per rules.Just cash receipts are not sufficient. As per latest scheme a builder can also pay 1% VAT on the entire recipts without showing the break up ,and collect the same from flat buyers.Now put all these points before him.If he still demands a wrong amount as VAt or ST you may get a lawer's notice also issued,to expalin clearly or face  litigation. Even though a flat has been booked during its construction one has to pay tax on the entire price........MJK