I have booked a flat in bangalore. The total amount of the flat comes 45.8(basic cost 40+ car parking - 2, other charges(elec,water etc) - 3.8) Now builder is asking the vat+ service tax as follows service tax - 4.8*total cost(45.8) vat - 5*total cost
Is it correct? he told me that it is according to composit scheme. Also should he charge vat+st on elec+water charges..
03 October 2012
Yes, your builder is correct in charging VAT and St on entire cost of Flat including Electricity and water charges since they are considered as taxable services in his bill or invoice.
03 October 2012
No, 4.8% is For Work Contracts . rule states the following features for the valuation of the Works Contract service:-
Value of Works Contract = Gross amount charged – Value of transfer of property in goods. However, VAT or Sales Tax is not includible in the value of material supplied. Value of Works contract service shall include the labour charges, amount paid to sub-contractor for labour and services, charges for planning, designing and architect’s fees, hire charges for machinery and tools, cost of consumables like water, electricity, fuel, etc., cost of establishment of contractor relatable to supply of labour and services, profit earned in relation to supply of labour and services. In the cases where VAT has been paid on ACTUAL value of transfer of property in goods, then this value will considered while calculating the value of Works Contract. If the VAT is not paid on the ACTUAL value, the assessee will calculate the same for the purpose for service tax and it will be deductible from the gross value. However, if the actual value is not ascertainable, then the following percentage will be the taxable value for the purpose of paying the service tax:-
Execution of original works ** 40% of total amount*** charged for Works Contract. Where total amount includes the value of land, it will be 25% of total amount charged.
Other Works Contract including completion and finishing services like glazing, plastering, floor and wall tiling, installation of electrical fitting not covered above. 60% of total amount charged for Works contract.
**The original work means - all new constructions and all types of additions and alterations to abandoned or damaged structures on land required to make them workable; *** Total amount includes the value of all goods and services – VAT - services supplied free of cost under the same contract or any other contract.
Where value of goods or services supplied free of cost is not ascertainable, the same shall be determined on the basis of the fair market value closely available resemblance.
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