Why to pay service tax in advance for underconstruction flat

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Mangesh

21 Points Posted on 01 February 2012

I am S Mangesh From Hyderabad, I have booked Flat at Lodha Group CASA PARADISO, HYDERABAD in 2010. which is still in under construction stage, Builder has promissed the deliver/position in Feb 2012 thats the reson I have booked this flat with Lodha group, Now Builder has pushed the deliver / position tentatively in Jul 2012. Inspite of delay from Builder site Builder is demanding Advace Service Tax on the amount which I have disbursed aroud 60%.

Why should i pay the service Tax in advance to builder as i have not received the service i.e. position of my flat and also it is not sure when i am going to get the position. In this view why should i pay service tax in advance to builder?

Please advice me on this at the earliest, as this builder is charging 18% Interest on Late payment which is huge amount.

Thanks & Regards

Mangesh.

Replies (3)

Guest

Posted on 06 February 2012

Dear Mangesh, Please note that as the construction of the said building is not completed, thus you are liable to pay Service Tax, If in case the construction is complete and you purchase a ready flat, then in that case Service Tax is not applicable, please refer to the following Article link

https://www.chsguru.com/2012/01/service-tax-application-on-flat-sale.html

Samir

ACA

105 Points Posted on 25 February 2012

sir I completely agree with you, But I am confused with respect to the term "Completion". As per Municipal laws a building is said to be complete after a O.C is issued? Please correct me if I am wrong

Guest

Posted on 06 March 2012

Dear Samir,

The Requirement to obtain Completion Certificate is somewhat relaxed under the Service Tax (Removal of Difficulty) Order, 2010, made effective from 1.7.2010, whereby it is provided that such Certificate can be obtained either from:

a. Any Government Authority including Local Authority.

b. An Architect registered with the Council of Architecture.

c. Chartered Engineer.

d. Licensed surveyor of the respective local authority.

Thus to remain out of Service Tax net, a builder need not wait till Completion Certificate is obtained from Local Authorities but instead can obtain such certificate from an Architect or Chartered Engineer and can still avoid charge of service tax, thus saving the flat buyers for unnecessary Tax burden.

https://www.chsguru.com/2012/01/service-tax-application-on-flat-sale.html