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Service Tax applicable for Under construction Property

1360 views 1 replies

karthik

Software

52 Points Joined March 2010

Hi,

I booked a flat (chennai) last october and the construction of the apartment is going on. It will be completed by this year end. Till date I have paid 90% of the payment and only 10% is pending from my side. I already received a payment letter from my builder asking to pay service tax immediately.

With the latest notifications, with effective from 1st july, am i eligible to pay service tax, is it applicable for me.

How much I need to pay, do i need to pay only for the remaining 10% or for the entire payment which I have paid

before 1st July 2010.

Kindly clarify me at the earliest.

Thanks

Karthik

Replies (1)

Jeevesh Mehta

Advocate- Corporate Commercial & Indire

861 Points Joined February 2009

Dear Karthik,

The provision of Service tax on projects under construction becomes effective from 1-7-2010. In your case the construction is still pending and you have already paid 90% of the total consideration. The provision does not talk about levying service tax retrospectively. Therefore the service tax should be payable on balance 10 % at the most and not on whole amount.

regards

Jeeveh Mehta

Maven Legal LLP

Ph: 9811617186