Shant Jain (Software Engineer) (25 Points)
18 February 2012Hi All,
Can some one guide me about Service tax and VAT tax on Under construction property. I have booded a house on 09/2009 and now it get completed. Builder is demanding Service and VAT tax on complate cost of the property. my Property is in Bhopal MP.
Thanks
Shant
MJ Krishnamurthy
(ACCT(Retd))
(7197 Points)
Replied 19 February 2012
MR Shant Jain,
VAT is applicable on the material part of the house construction and the service tax is levied on the labour cost (about 30% of the total cost) involved in the same. VAT rate is 13.5% or 14% in most of the states and service tax is 10+1 % .But, the contractors also opt for composition under VAT @ 4% or 5% and 4% under service tax. Some times builders collect wrong amounts without issuing proper invoices.Before paying these taxes ask for regular invoices from the apartment builder with their TIN no or ,if he has already issued some invoices to other buyers, take a copy of it and verify at the concerned VAT office and if it is found to be correct, then pay the taxes.Do not pay any taxes without issue of proper invoices and confirming the genuineness of the same.
MJK
K P R MURALIDARAN
(SR PROJ MANAGER)
(22 Points)
Replied 23 February 2012
| Originally posted by : Shant Jain | ||
 |
Hi All, Can some one guide me about Service tax and VAT tax on Under construction property. I have booded a house on 09/2009 and now it get completed. Builder is demanding Service and VAT tax on complate cost of the property. my Property is in Bhopal MP. Thanks Shant |
 |
K P R MURALIDARAN
(SR PROJ MANAGER)
(22 Points)
Replied 23 February 2012
As per the circular issued by finance dept, service tax is payable only for the payment given after 01.07.2010 for the property under construction
Vijaykumar Idnani
(M.D.)
(22 Points)
Replied 12 June 2012
Hello Everyone,
I have an apt. in an complex which is almost completed (Mumbai - Maharashtra) & we have also got the possession of the flat. We had booked this apt. in August 2009. But now the builder is asking us to pay 5% VAT. His saying is all the registrations done before April 2010 are applicable to 5% VAT (Including Interest), while as those done after April 2010 are applicable to 1% VAT. But, the builder has not given any proper acknowledgement or Govt, Circular regarding the same. That's why we are a bit confused & need proper guidance & help.
Regards
Thnx
MJ Krishnamurthy
(ACCT(Retd))
(7197 Points)
Replied 13 June 2012
Mr V Idnani,
The point quoted by the builder that 1% VAT is applicable to the registrations of flats done after April,2010 is correct. You might have booked for an apartment in Aug,09,but the point is when it was registered. You say now it is almost complete. They can not register a property while under construction.. The agreement entered into while booking a flat is not important,but the agreement of final sale is important. If the sale deed is made after 1-4-2010,you have to pay only 1% of the total consideration mentioned in the agreement.(pl see Govt of Maharashtra noyification No VAT1510/CR-65/Taxation-1 dated 9-7-2010.) Before that period it is 4% excluding land cost and charges for some amenities ..... .MJK
Vijaykumar Idnani
(M.D.)
(22 Points)
Replied 22 June 2012
Thnx for replying,
We had booked the flat in April 2009 & registered in Aug 2009. Now the Building is completed & all our payments are cleared with 1 yr Maintainance & Service Tax, but he isnt giving us the Possession Letter & asking us to pay 5% VAT + Interest. So, what should we do know.....?
Anand
(Sr Engineer)
(24 Points)
Replied 14 August 2012
I have paid 1 Lac 71 k in Mar 2006 and registration made on 1 June 2006 Property worth of 1793000 .
I paid registration charge 73K + 13.5 K as stamp duty , , paid installements in duration 2006-2007 .received flat possession on 1 Sep 2007.
Today after 6 years , we received VAT notice from Builder asking 5% VAT on 17930000 which is comes to 90k ninty thousand rupees ...
Query
1.Is VAT applicable to me ? from what date ? is VAT is applicable on 01 July 2006 onwards ?
2. 5% VAT - what is the calculation ? and why not only 1% ?
3. what is document we should ask to builder for confirmation ?
Please guide us ... 90k is huge amount and builder said he may add interest to it ...
MJ Krishnamurthy
(ACCT(Retd))
(7197 Points)
Replied 14 August 2012
Mr Anand,
As I have quoted earlier VAT is payable at 1% only if demanded on the full amount paid by you and entered in the agreement. If 5% is demanded then they should reduce the land cost which is around 40% of the total reciepts,i.e.in this case around 7.2 laks.So,5% on the balance comes to Rs60k only.This 1% rate for the agreements made after 1-4-2010 only if you have entered into an agreement before that date then it will be 4% only on apartment construction cost (minus land cost). For collecting VAT from the buyers builder should issue a tax invoice,with all necessary details like,his TIN no,quantity(or area of flat) rate,total,less land cost and cost of amenities(security,club,swimming pool,lift etc). Furhter, the builder should have paid VAT to the department as and when he received payments from you.(in 2006 itself),not six years later.If he was a regular tax payer timely invoices should have been issued for each of your payments. Without a proper tax invoice never pay a single rupee of VAT. You may ask them to show their monthly VAT returns also It should not only be for you, but in common for all flat buyers. I think there is some humbug in this demand of VAT. When some more buyers collectively bargain,posing the above points,certain success will be seen.........MJK
dilshad begum
(student)
(29 Points)
Replied 28 August 2012
applicability of service tax on under contruction apartment.how to calculate and on which amount.
spkar
(Others)
(21 Points)
Replied 07 June 2016
Logically and legally, the service tax at appropriate is applicable on the registered transaction value as at the date of registration before the competent authority (i.e.Registrar) less (land price + VAT if any applicable+registry cost+stamp duty). Any other legal view is welcome
karan jit singh
(Consultant)
(1299 Points)
Replied 11 June 2016
| Originally posted by : Shant Jain | ||
 |
Hi All, Can some one guide me about Service tax and VAT tax on Under construction property. I have booded a house on 09/2009 and now it get completed. Builder is demanding Service and VAT tax on complate cost of the property. my Property is in Bhopal MP. Thanks Shant |
 |
ST would be applicable on whole consideration. FOr VAT consult ur State VAT experts.
Regards
Karanjit Singh | +91-7503588224
karan jit singh
(Consultant)
(1299 Points)
Replied 11 June 2016
| Originally posted by : Shant Jain | ||
|
Hi All, Can some one guide me about Service tax and VAT tax on Under construction property. I have booded a house on 09/2009 and now it get completed. Builder is demanding Service and VAT tax on complate cost of the property. my Property is in Bhopal MP. Thanks Shant |
|
ST would be applicable on whole consideration. FOr VAT consult ur State VAT experts.
Regards
Karanjit Singh | +91-7503588224
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