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Service tax on booking amount of flat or shop

Ritesh khurana (CA student) (175 Points)

28 December 2011

Dear Expert

Kindly update

after 1.07.11 Do service tax is applicable on booking amount of flat , when there is no sure that flat will be alloted to client or not or buyer has option to cancel the booking before the allotement.

Is there any option to charge service tax on booking amount after identification of flat or allotment by reverse calculation and pay to govt afte allotment of flat

thanks

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6 Replies

Amrin Himani (A Alwani & Co.) (156 Points)
Replied 28 December 2011

Kindly note that there isnt any specific note that service tax is payable on booked flats but it is said that assessee has to pay s.tax on advance against booking and not on allotment.

If that advance receipts are canceled and it is given to any other person then credit of the same amt paid under section 6 in return as well note that the notification is from 1-7-2010 and not 2011.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 28 December 2011

Tax is payable on booking amount as well unless the same is accounted for as a refundable deposit. It is advisable to pay tax on reverse working and if flat is not allotted, refund the amount to party and take credit of tax paid as per Rule 6(3) of ST Rules.

ramesh (DGM) (506 Points)
Replied 30 December 2011

it is better to allocate initial booking amount towards non taxabable services, so that we can avoid this situation. most of the builders are allocating initial booking amount towards land cost.

ramesh (DGM) (506 Points)
Replied 30 December 2011

it is better to allocate initial booking amount towards non taxabable services, so that we can avoid this situation. most of the builders are allocating initial booking amount towards land cost.