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Service tax on poperties puchased before Apr 2010

Swaroop KM (Project Manager) (28 Points)

29 April 2010

Hi,

In the current Finance bill, there was an introduction of service tax on buyers for properties unders construction. I have purchased a flat in Nov 2008 and its still under construction, I have released about 90% of the total sale value to the builder. Will I have to pay the service tax thats passed in this financial year even though I have purchased the property in Nov 2008? Any help on this topic is highly appreciated.

REgards

Swaroop

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5 Replies

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 01 May 2010

Originally posted by : Swaroop KM
	Hi, In the current Finance bill, there was an introduction of service tax on buyers for properties unders construction. I have purchased a flat in Nov 2008 and its still under construction, I have released about 90% of the total sale value to the builder. Will I have to pay the service tax thats passed in this financial year even though I have purchased the property in Nov 2008? Any help on this topic is highly appreciated. REgards Swaroop

Dear Mr. Swaroop,

You have just booked the Flat in Nov' 2008 which is under construction and you have made construction linked payments to the builder. If possession of the flat is given by 30.06.2010, no service tax is applicable. If possession is given after 30.06.2010, service tax @ 2.50% of the total cost of flat will be applicable. However, Ministry of Finance, Govt. of India may issue some notification and may give some concessions or may give further clarifications.

Thanks

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Vishal Michel (Accounts Executive) (24 Points)
Replied 03 May 2010

Hi,

In the current Finance bill, there was an introduction of service tax on buyers for properties unders construction. I supposed to do agreement in next week. I have booked the flat on 22.03.2010 and remitted my contribution to builder. The possesion will be given in Jan 2011 and its still under construction. The agreement cost is 15 lacs. Shall I have to pay service tax? At what rate? and how much.

Please help on this topic.

Thanks & Regards

Vishal

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 03 May 2010

Originally posted by : Vishal Michel
	Hi, In the current Finance bill, there was an introduction of service tax on buyers for properties unders construction. I supposed to do agreement in next week. I have booked the flat on 22.03.2010 and remitted my contribution to builder. The possesion will be given in Jan 2011 and its still under construction. The agreement cost is 15 lacs. Shall I have to pay service tax? At what rate? and how much. Please help on this topic. Thanks & Regards Vishal

Dear Vishal,

If possession of the flat is given by 30.06.2010, no service tax is applicable. If possession is given after 30.06.2010, service tax @ 2.50% of the total cost of flat will be applicable. However, Ministry of Finance, Govt. of India may issue some notification and may give some concessions or may give further clarifications.

In your case, since the possession will be given in January 2011, hence to the best of my knowledge, service tax @ 2.50% of the total cost of flat i.e. Rs. 15.00 lacs will be applicable in your case and you have to pay Rs. 37,500/- additional on a/c of service tax.

Thanks

Vishal Michel (Accounts Executive) (24 Points)
Replied 21 July 2010

Hi,

This is Vishal again. I have purchsed a new flat which is still under construction. My agreement cost is 15,89,000?- The payment of Rs.8,69,000/- already remitted to builder. The payment is made slab wise & on completion cerficate. Will I have to pay service tax 2.5% on total agreement cost? or on remaining payment.

Please give your expert comment.

Regards,

Vishal Michel