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service tax on purchase of flat

dinesh bhandary (Manager- Finance & corporate a) (82 Points)

10 September 2007

dear sir,

i heard that there will be exemption of service tax on purchase of flat. Now i am planning to purchase flat. in theire price list i find service tax . whether i can ask them exemption for the same. the price list i received is 10 days back.

with regards

dinesh

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14 Replies

Shyam Lal Naik (Service) (6156 Points)
Replied 10 September 2007

Its true. In case of sale of flats, it is a merely purchase and sale and no service is involved. This has been clarified by the CBEC in a recent circular.

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(Guest)

The prices of real estate have always been market driven. The Government has clarified that there is no service tax on sale of apartments; it is not that the Government has now exempted soemthing from tax which was eralier chargeable to tax. The builder cannot cahrge anything extra towards service tax, which is waht you need to ensure.

(Guest)

I bought a flat in chennai in June 2006. But still no power,Electricity and sewage. Builder says its ready for possession and also asking me to pay service tax 12.5% of to tal flat cost minus registered undivided land cost. I showed him the New Govt rule to him, but he says as our project has more than 12 flats and as per agreement he is the contractor for me, he says I have to pay. can you please help me on clarifying this. I really appreciate your help.

(Guest)

If purcahased during booking satge , service tax`is chargeable.As he is not selling the Flat , but constructing flat for u

shyam kishor porwal (Chartered Accountant) (183 Points)
Replied 15 December 2007

Dear Mr. Sekhar, Service tax is charged on construction of Residential Building having flat more then 12. This is for your informtion that there is also a provision of abatement @ 67 %. Pls tell to your contract and avail the benefit of abatement. Net effective rate will be 4.08%. Regards: Shyam Kishor Porwal 9999032405

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(Guest)

Best option is to pay under WCT @ 2% + Cess MOb : 931709751

shyam kishor porwal (Chartered Accountant) (183 Points)
Replied 17 December 2007

Dear Mr. Patil,
You are right. But works contract service is taxable from 1st June, 2007. Hence if construction is before this period you can not avail this benefit.
Pls check
Thank you

(Guest)

Dear Sir

I am buying a flat of Rs 63000 and its a Comercial / Residental flat having 10 flats and 4 sohps in the buliding. Morover the Bulder having that particular land in his name were he devloped that apartment.

Now He is asking for 12.36 % service tax wherese up to 12 flats there is no service tax applicable

Please advise sir what to do

Thanks & Reagrds

Sanjay Srivastava

santosh (Associate Solution Architect) (24 Points)
Replied 05 October 2009

Hi Sir,

Recently i bought one apartment in hyderabad.

At the time of deal he never discussed about the service tax but now the builder/owner is asking me the service tax of 4%.

Please guide me over here.

santosh (Associate Solution Architect) (24 Points)
Replied 05 October 2009

Hi Sir,

Recently i bought one apartment in hyderabad.

At the time of deal he never discussed about the service tax but now the builder/owner is asking me the service tax of 4%.

Please guide me over here.

The apartment is already built.

Regards,

Santy

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Gautam Joshi (Partner) (361 Points)
Replied 05 October 2009

Hi all,

As per the recent circular of Service Tax on construction of flats, there is no service tax is to be charged if the flat is constructed on a land of developer and made ready by him only as such transaction amounts to sale of flat and not of service.

In contrary, if a person gives land to contractor and asks him to construct the flat the way in which he wants then the service tax will come on it as its a service in form of customisation of flats construction and so builder will ask for the service tax as an consultant. Hes more of a consultant in this case than only builder.

Warm Regards.

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 07 October 2009

Normally ( subject to special types of agreements the builder of apartments are not liable due to the fact that they transfer immovable property or alternatively the flat is meant for the personal use of the tenants therefore not a complex at all. This was clarified in the circular of January 2009 after which most builders stopped p[aying the ST.

hemant (developer) (22 Points)
Replied 06 January 2010

hello Madhukar,

I have purchased flat in pune in april 2009. now after completion (at a time of possession) of flat, builder is demanding for service tax (a security cheque). Is really service tax chargeable for this deal? In agreement it is mentioned that purchaser should pay service tax (if applicable). Is it applicable now or will be applicable in future for the same agreement?

Regards,

hemant

Sanjay singh (jvo) (21 Points)
Replied 16 July 2011

Originally posted by : Gautam Joshi
	Hi all, As per the recent circular of Service Tax on construction of flats, there is no service tax is to be charged if the flat is constructed on a land of developer and made ready by him only as such transaction amounts to sale of flat and not of service. In contrary, if a person gives land to contractor and asks him to construct the flat the way in which he wants then the service tax will come on it as its a service in form of customisation of flats construction and so builder will ask for the service tax as an consultant. Hes more of a consultant in this case than only builder. Warm Regards.