Service tax on flat purchase

Refer CASE suresh kumar bansal V/s UOI

It is exempt now 

but it is high court decision also service tax is under central government sp you can take the benefit 

There are 2 different methods of calculating VAT and Service Tax for under construction flat

Method 1

If total project cost is apportioned flat wise then there are 3 cost components of any under construction flat. These 3 cost heads are Land Cost (approx 35%), Material Cost (approx 40%) and Labour + Service Cost (approx 25%). 

Material Cost + Labour + Service Cost is collectively referred as Construction Value.

Method 2:

In 2nd method, instead of calculating head wise cost for under construction flat, VAT and Service Tax is calculated on Total contract value of the flat. This value is amount mentioned in agreement value or registration value / value for stamp duty purpose, Whichever is higher.

Important Points:

1. Land cost is exempted from both VAT and Service Tax.

2. Total contract value include value of land under composition scheme.

3. VAT and Service Tax is not applicable on Ready to Occupy flats. You may postpone sale agreement to be signed after completion certificate is issued. 

4. Builder will issue 2 separate payment receipts i.e. one each for VAT (with Tax Invoice no and TIN) and ST (with Tax Invoice No and ST registration no).

5. Service Tax is not applicable on single residential unit i.e. independent house, villa or bungalow.

6. Service Tax is not applicable for low cost housing with carpet area of upto 60 sq. mt. per house in the housing complex but subject to approval from concerned authorities.