Vat and S.T applicablity in Purchase of Flat

Hey all,

This is regarding some practical issue which is confusing me…..my friend booked a flat in Pune (Maharashtra)…..n his builder is charging Vat @ 1% and Service tax @ 2.62%.....my question is that how come both S.T & Vat are applicable at a point of time…..i heard a news that maharashtra govt w.e.f. July'10 is charging Vat...bt not service tax....

Plz guys help me out yar…..everyday he is asking me for this….n I hv no  clue on this…..Thanks in advance …bbye….

Replies (1)

As far as my understanding of the topic related;

I) The thing is correct as VAT need to be paid on construction service contracts. However the VAT input is claimed by the construction firm, it will reduce the amount of VAT output receivable from the amount of VAT input payable. However whole 1% is charged from the purchaser of Flat.

2) Now with regards to Service tax, Construction companies fall in the ambit of services tax. Thus it shall charge service tax @ 10.3% on the contract.

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