Service tax for builders

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ALOK RATNA

CHIEF CONSULTANT

78 Points Posted on 21 October 2011

Please let me know in brief the existing provision of service tax in case of sale of semi finished flats and fully finished flats by builders-- which are being sold now and also in case it has been sold earlier??? what is the rate and on what amount it is chargeable (sale deed amount/amount of sale agreement or construction cost or what)?//

Replies (2)

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 21 October 2011

Sale of flat is liable to service tax from 01-07-2010. Tax is payable only when payment is received prior to completion certificate. 4.12% on gross value of flat or 10.3% on 1/3rd of value. Value is the gross amount payable to the developer less VAT.

Anil

XYZ

24 Points Posted on 10 November 2011

Hello Mr. Unnikrishnan,

I am from Pune (Maharashtra). My builder is charging me service tax on following amounts:

Rs. 34,75,200 (total sqft * rate per sqft) - cost of property

Rs. 10,000 - charges and expenses for formation of association of apartment owners.

Rs. 75,000 - for MSECDL (electricity) meter deposit, transformer charges, common meter installation charges.

Rs. 65,000 - Towards maintenance charges of society for 3 years after possession of said flat.

My queries:

1. According to my knowledge, service tax is applicable only to the construction cost. Am I liable to pay service tax on 1.5 Lakhs (10,000+75,000+65,000)?

2. Is service tax applicable on amount paid before July 2010? My agreement was done on 14th July 2010 but I paid the booking amount of 5.5 Lakhs in June 2010.

3. Is VAT applicable on construction cost too?

Please help.

Thanks in advance,

Anil