The Finance Bill 2010 has received presidential assent on 8th May 2010 and therefore a new chapter in taxing flat sale has started .In the definition of the taxable services of ‘Construction of Complex service’ [section 65 (105) (zzzh)], and ‘Commercial or industrial construction service’ [section 65 (105) (zzq)] given in the Finance Act 1994 now stipulates that construction of house (in any form – apartment / flat / row house / etc) by a builder in a complex is a “service”, and introduced the service tax of 10.3% on such a services .
There would be no levy of the service tax, if the entire amount for the property purchase is paid after the receipt of a completion certificate
The low-cost housing segment (property worth less than Rs. 20 lakh) will be totally exempt from service tax.
This tax would not be applicable to resale properties, as resale properties would essentially have obtained a completion certificate
Since, 75% of the amount charged by the builder is considered to be cost of land, materials, you would pay 10.3% service tax only on 25% of the amount that you have paid.
Service tax will be applicable for only under-construction properties and not for completed units.
Special services provided by a builder etc. to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charges [Section 65 (105) (zzzzu)] have also been brought as new service under service tax net.Service tax of 10.3% has also been levied on any payment made by you to the builder for getting a preferential location for your house / flat.
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Any amount paid for getting an apartment on a higher floor
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Any amount paid to get a flat / house with a specific number
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Any amount paid to get a flat / house facing a specific amenity, say a swimming pool, lake, park, sea, etc
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Any amount paid to get an apartment / house facing a specific direction (maybe as per vaastu)
No service tax on amount paid for parking garage.
