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Service tax on residential flat

P Venkata Devaraj (Project Mgr.) (54 Points)

09 December 2015

Hi,

I have purchased an apartment in a residential copmlex comprising of around 350 units. My apartment is 1510 Sq. Ft.

I would like to know the applicatione service tax rate that the builder should charge me and how this has to be calculated and on which costs (Builder collects payment under various heads like UDS cost, construction cost, EB deposit, Car parking, Infrastructure charges, Piped Gas, Water and seweage deposit).

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2 Replies

Raghuveer (Executive) (167 Points)
Replied 09 December 2015

Dear Sir, With regard to your query, I would like you to note that no service tax would be payable by you to your builder on purchase of residential apartment if the same is sold to you only after obtaining the completion certificate from the municipality/corporation or anyother designated to issue the certificate in your state, as the case may be. However, if you had entered into a contract with the buyer prior to the completion of construction, then Service tax would be payable. In this regard, as the apartment is a residential unit of less than 2000 sq ft, if the total consideration payable to the builder is less than Rs. 1 crore, the builder Could avail 75% abatement on the consideration charged (including the value of land) and charge Service tax only on the remaining 25% of the consideration @ 14%. In addition to the same, if the amount is paid after 15th November 2015, Swachh Bharat Cess @ 0.50% would also be payable on the abated value i.e. on 25% of the consideration. Thus the effective rate of tax shall be 3.50% or 3.625%, respectively. Hope this clarifies.

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P Venkata Devaraj (Project Mgr.) (54 Points)
Replied 12 December 2015

Thanks Raghuveer for the clarification.

Could you also let me know similar details for a FOR MODULAR KITCHEN , KITCHEN ACCESSORIES. I have received a lumpsum quotation (say Rs 100000) without any break up for material labour etc, They have charged 14.5 % as service tax on the lumpsum amount. is this correct ?