Service tax applicable for flats or not

2605 views 5 replies

karthik

Software

52 Points Joined March 2010

Hi all,

I have a clarification regd service tax payment. I booked a flat in the month of Oct 2009 and the construction is going on and it will be handed over to us by end of this year. Recently I received an intimation from my builder saying that I have to pay service tax which comes around 1 lakh. When I enquired builder is saying that recently amendments happened in 2010 budget so we have to pay service tax as on date.

When I search in the internet I came to know that it will come into effect only after july 2010 and also our budget 2010 is yet to be passed in the parliament so service tax is not applicable for those who booked the flats before july 2010. But my builder is not accepting and he is asking us to pay the amount. We don't know how to tackle this. Whether legally we have to approach some one or how to approach this problem.

Also please clarify that service tax is applicable for us or not. what amendments has been done in our recent budget and since it is yet to be passed in parliament how is it applicable to us with retrospective effect. Please clarify.

Cost of my apartment is Rs.3250000 and I got service tax intimation from the builder for Rs. 96000. How they are calculating service tax. Pls clarify.

Please mail your answer to karthi.aish @ gmail.com

thanks.

Karthik

Replies (5)

Raj Patel

C.A + C.S.

174 Points Joined January 2009

U need nt to pay Service tax bcz u have booked Falt on oct-2009,

Notification Clearly Said that “There is a case for giving relief to buyers who booked their houses before the service is notified....

The government plans to include charges such as development fee, parking fee and premium location charges usually paid at the time of completion of construction in the base price.

Only 33% of the base price of the flat will be chargeable to service tax levied at the rate of 10%,

taking the effective tax to 3.3%.

it is to be operative from a prospective date, booking a house in the next 3-4 months may result in savings of up to 4% for a customer. Those who want to purchase a flat will have have to do it before July 2010 when the notification comes into effect.

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

Originally posted by : karthik

Hi all,

I have a clarification regd service tax payment. I booked a flat in the month of Oct 2009 and the construction is going on and it will be handed over to us by end of this year. Recently I received an intimation from my builder saying that I have to pay service tax which comes around 1 lakh. When I enquired builder is saying that recently amendments happened in 2010 budget so we have to pay service tax as on date.

When I search in the internet I came to know that it will come into effect only after july 2010 and also our budget 2010 is yet to be passed in the parliament so service tax is not applicable for those who booked the flats before july 2010. But my builder is not accepting and he is asking us to pay the amount. We don't know how to tackle this. Whether legally we have to approach some one or how to approach this problem.

Also please clarify that service tax is applicable for us or not. what amendments has been done in our recent budget and since it is yet to be passed in parliament how is it applicable to us with retrospective effect. Please clarify.

Cost of my apartment is Rs.3250000 and I got service tax intimation from the builder for Rs. 96000. How they are calculating service tax. Pls clarify.

Please mail your answer to karthi.aish @ gmail.com

thanks.

Karthik

Dear Kartik,

You can take a legal opinion from your local consultant and give to the builder under acknowledgement. In my view the changes made make hardly any differecne for your transaction.

Madhukar

karthik

Software

52 Points Joined March 2010

Thanks Raj

Thanks Madhukar

I got a call from my builder saying that I should pay service tax because of recent amendments in budget 2010. Please let me know how to proceed on this. I am not in a position to pay service tax as the finance bill is yet to pass in the parliament. I need a valid document saying that we are not eligible for the service tax or atleast nothing is finalised in the budget. Please can anyone send it to my personal id karthi.aish @ gmail.com.

we 5 of the flat owners are against this af of now and many more are yet to join with us, so please can anyone tell me how to approach on this. Do I need to get a letter from any chartered accountant and show it to the builder. Please clarify.

Thanks in advance

Karthik

obeid

learner

292 Points Joined April 2008

Hi I want to know the ST for seller of flats, Exemption limit, number of flats in a single project or total projects done in the FY?

CA.SKR

CA; CS-Final (One Group); DISA (ICAI); I

442 Points Joined August 2009

Dear Mr. Karthik,

The finance bill 2010 has been passed by Lok Sabha recently and has been forwarded to President of India for her assent to become law.

As further amended, now service tax will be applicable @ 2.50% of the total cost of flat. This will be applicable w.e.f. 1st July 2010 i.e. possession given on or after 1st July 2010. The service tax liability will be payable by you only at the time of handing over possession of flat to you.

Thanks