St and vat on semi-finished flat pruchase (real estate)
Raju Kalasapudi (Retired Finance professional) (29 Points)
23 December 2016Raju Kalasapudi (Retired Finance professional) (29 Points)
23 December 2016
Shubham Gupta
(Business Consultants)
(2077 Points)
Replied 23 December 2016
service tax cannot be levied on the value of undivided share of land acquired by a buyer of a dwelling unit or on value of goods which were incorporated in the project by a developer.
https://www.thehindubusinessline.com/news/real-estate/no-service-tax-on-purchase-of-under-construction-flats/article8710231.ece
www.mytaxfiling.in
info @ mytaxfiling.in
Ashoka G
(Student CA IPC / IPCC)
(115 Points)
Replied 24 December 2016
Ashoka G
(Student CA IPC / IPCC)
(115 Points)
Replied 24 December 2016
Raju Kalasapudi
(Retired Finance professional)
(29 Points)
Replied 24 December 2016
Sir what is option 2
Raju Kalasapudi
(Retired Finance professional)
(29 Points)
Replied 24 December 2016
Sir what is option 2
Ashoka G
(Student CA IPC / IPCC)
(115 Points)
Replied 26 December 2016
I have already given both the options. I will explain those option clearly. Please note that these options were only for Service Tax purpose and not for VAT.
Lets assume that Sale Deed is made for Land value (pertaining to Undivided Share of Land) and construction agreement is for construction cost.
Option 1 - Paying service tax on 30% Value including Land Value
Under this option service tax shall be payable on 30% value including land value. That is Rs.2,89,395/- (6431000*30/100*15%).
Option 2 - Paying Service Tax on 40% value excluding Land Value
Under this option Service Tax shall be payable on 40% Value excluding land Value. That is Rs.2,31,060/- (38,51,000*40/100*15%)
Raju Kalasapudi
(Retired Finance professional)
(29 Points)
Replied 26 December 2016
How come builder is asking me to pay 4.5% service tax on full value of consideration and Vat @ 1.25% on service tax so calculated plus full value of consideration. This they say is the calculation under composite scheme. how far they are correct. please explain.
Ashoka G
(Student CA IPC / IPCC)
(115 Points)
Replied 27 December 2016
If the service provider is charging servuce tax, he is eligible to avail Cenvat Credit on Input Services.
For an instance, for constructing flat, he will take services from other Sub-Contractors. The service tax charged by other Sub-Contractors will be taken as Cenvat Credit.
For Instance, if sub contractor charges Rs.2/- ST and if the service tax payable on Final flat is Rs.6/-, he will pay Rs.4/- to the govt after reducing Rs.2/- ST charged by subcontractor.
In my view, 4.50% service tax could be the total tax payable on flat after reducing assumed Cenvat Credit.