St on residential property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 August 2011 Dear Sir

On 16-Feb-11, I bought one residential flat in a 14-storey building (having around 100 apartments) and got my flat registration on 31-Mar-11.

Price of flat is Rs 48 Lakh, including 2 car parking and 100/- per SFT corpus fund.

Building is still under construction and builder will give possession in next 3 months.

So far, I have made payment of Rs 37 lakh (down payment + partly disbursed loan) to builder and will make remaining 11 lakh at possession.

Last week, I got one letter from builder saying that govt of India has made it mandatory to pay Service Tax for all residential flats got registered on/after

10-Jul-2010.

He is asking me to pay Service Tax @ 10.3 % of 33% of 48 lakh. Is it true?

Should I pay requested amount to him?

Pls help.

Thanks and Regards
Mayank

CS Bijoy

CS Bijoy (Expert)
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19 August 2011 It should be noted that the service tax would be levied only on under construction property. A property is considered “under construction” till the builder receives a “completion certificate” from the relevant authorities.
Thus, if an amount for the purchase of a property is paid to the builder before he obtains a completion certificate, it would be subject to service tax. Only if the entire amount for the property purchase is paid after the receipt of a completion certificate, there would be no levy of the service tax.