Service tax percentage on new property

This query is : Resolved

renuka (Querist)
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06 December 2013 HI,

I recently bought villa in hyderabad, Builder charged 4.75% as service tax on total value,few of freinds bought property in diffrent projects,for them their builder charged 3.09% is the service tax, So i questioned my builder then he is saying that 4.75% is correct, But still i am confusing, As per goverment What is the service tax percentage on the property,is it 3.09% or 4,75%?

I am requesting experts here to suggest me on this.

Thank you,
Regards,
Renuka.

Annu Agarwal

Annu Agarwal (Expert)
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06 December 2013 Renuka if ur property is above Rs1 cr and carpet area is above 2000 sq ft then service tax shall be levied at 3.708% and if its otherwise the rate is 3.09%.
Please confirm from your builder as to on what basis he is charging 4.75%.

renuka

renuka (Querist)
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07 December 2013 At the outset I Thank you so much for allocating your valuble time in providing your assistance on this.

I just spoke with builder, He said as per Notification No. 24/2012 - Service Tax, He is calculating service tax as 12.36% on 40% of the total agreement value, after caluclating this amount it would be aprox near to 4.75% on my total agreement value of 80L.

Is it correct calculation? and is it the proper way to consider this notification in my situation as there is no contract between us,i agreed to buy villa at 80L that's it.

Thank you,

Regards,
Renuka.

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Annu Agarwal

Annu Agarwal (Expert)
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07 December 2013 As per my opinion the builder should charge 3.09% as service tax.
In support of my view there are the follwing references:
1.The builder is charging a single amount of Rs 80lakhs which means it includes the cost of land as well cost of construction.
2.As per notification 26/2012 dated 20.06.2012 in case of construction of complex,building intended for sale to buyer,where the value of land is included in the amount charged from service receiver i.e. YOU,then service tax is payable @25% of 12.36%.

Therefore your case falls clearly in the above notification.

Notification No. 24/2012 is applicable on all other construction except the one specifically covered by notification 26/2012