service tax for payments before 01.07.2010 for Flat

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sumit khare (Querist)
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14 December 2010 I have purchased one Flat in sep 2009 That time service tax for the purchase of Flat was not in picture .The agreement amount was 21 Lacs including cost of registry & maintenance .Now the builder is asking for the service tax at the time of possession for entire 21 lacs amount and at the rate of 4.5% in Madhya pradesh .i.e. Rs. 94500/- .As per the Explanation of the Finance act 2010 wef 1/7/2010 ,The payments before 01.07.2010 will not be under the service tax criteria.
Please suggest if i am correct .Also please tell what is the service tax rate for such case in Madhya Pradesh .

Thanks in advance

CA.RAJIV SHUKLA FCA

CA.RAJIV SHUKLA FCA (Expert)
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14 December 2010 Dear Sumit Ji,

1-Construction is fully completed before 01.07.2010 but completion certification from local authority is not granted till 01.07.2010 no service tax would be payable as Service Tax is on PROVSION OF SERVICE which is taxable event. Receipt of payment doesnot decided tax liability.
2-Receipt of Advance will not determine tax Liabilty TAX LIABILITY WILL BE ON THE BASIS OF PERCENTAGE OF CONSTRUCTION SERVICES provided after 01.07.2010.

3-IF SERVICE IS TO BE PROVIDED after 01.07.2010 and amount received from customer before 01.07.2010 service tax is payable immediatley after 01.07.2010.

4-RATE OF SERVICE TAX IN INDIA IS SAME 10.30% COUNTRY AS WHOLE.

Mehtod of calculation is as under

A-If Construction covered by Composition Scheme then Rate uis 4.12%
100*4.12%

B-If Construction covered by Abatement Scheme then Rate uis 3.399%

100*33%*10.30%

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sumit khare

sumit khare (Querist)
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14 December 2010 Dear sir,Thanx for your valuable advise , i want to know that in my case the construction was not completed before 1.7.2010 & no completion certificate was obtained by builder before 01.7.2010 .the possession was not taken before and the balance amount of approx 2.5 lacs is still to be paid .What about service tax in this case.
I have gone through the details given at site www.dateyvs.com/gta.htm & it says in Point no 2 under Transitory provisions that the services provided before 01.7.2010 will not be liable for service tax and such bifucation is possible only if builder keeps the record of services provided . builder /developer.Thanx in advance for
Your valuable inputs

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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15 December 2010 As per notification no.36 / 2010, the liability for service tax prior to 01.07.2010 is equal to the amount already collected. In case the builder has not levied or collected any tax till that date, the service tax would be leviable on TAX LIABILITY WILL BE ON THE BASIS OF PERCENTAGE OF CONSTRUCTION SERVICES provided after 01.07.2010.

For the earlier period shelter can be traken under notification no.36 / 2010.