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Service tax on flat value

21 December 2016

I am going to purchase a apartment of Rs.15 lakh (builder has told the price and now it is under constructed). Please tell me , Is service tax lavied on the value of apartment or not? If yes what is the rate of tax?

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5 Replies

(Guest)

There is no service tax, if the whole amount is paid after issuance of completion certificate.

Subhajit Haldar (..) (24 Points)
Replied 22 December 2016

I have mentioned that it is under construction. 1st floor is completed and my apartment is on 2nd floor. I am going to purchase before completion.

Sanjay S (Chartered Accountant) (1375 Points)
Replied 22 December 2016

From the above discussion, I reckon that Service Tax has to be levied on 30% of Gross Amount Charged (Rs.15,00,000).

This means Taxable Value = (Rs.15Lakhs x 30%) = Rs. 4.5 Lakhs

Hence the Service tax may be levied @ 15% on Taxable value = Rs.4.5 Lakhs x 15% = Rs.67,500/-.

For Technical info on taxability of above service, one may refer Section 66E(b) of Finance Act, 1994 - CONSTRUCTION INTENDED FOR SALE.

Vishant Gupta (Student CA Final ) (29 Points)
Replied 22 December 2016

As the amount is paid before the issuance of completion certificate, this is declared service as per section 66 (e) of Finance Act, 1994. Service tax shall be levied at 30% on the gross amount charged. since the gross amount charged is Rs 15 lakhs, service tax shall be on Rs. 4.5 lakhs (i,e 30% of Rs. 15 lakhs).So amount of service tax shall be: -
1.Basic service tax- 14% of 4.5 lakh= Rs. 63,000
2. Swatch bharat cesa- 0.5% of 4.5 lakhs= Rs. 2250
3. Krishi kalyan cess- 0.5% of Rs. 4.5 lakhs= Rs. 2250.
So total service tax shall be Rs. 67,500

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Raju Kalasapudi (Retired Finance professional) (29 Points)
Replied 23 December 2016

How about the Service Tax and VAT calculation on the sale consideration (64.31lacs) of semifinished flat under construction, if the sale consideration is devided into Sale deed (25.80lacs) and Construction agreement (38.51lacs)