Tax on flat booked in building under construction

Querist : Anonymous (Querist) 23 October 2011 This query is : Resolved
I have booked a flat in Mumbai in May 2007(agreement dated Oct.2007)with possession by 31/12/2008 but still waiting to get possession.Is VAT and/or Service Tax applicable when developer gives possession? if yes effective dates for the same and how much will be tax?(%ge of agreement value).Will developer require registration with Mah.Gov. for VAT& with Excise Dept for Service Tax? Can I pay taxes directly instead of paying to Developer?
Please give relevant notification nos./dates.

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ajay sethi (Expert) 23 October 2011
Builders/developers are now liable to service tax if any payment towards sale consideration is received before the grant of completion certificate by the competent authorities for such flats/units.

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.
According to GOI Notification No. 36/2010-ST dated 28.6.2010, the amount of advance paid prior to 1.7.2010 is not liable to service tax.

Therefore, only that consideration/amount which you will be paying on or after 1.7.2010 will attract service tax.

VAT at 1% on full consideration shall be charged before possession

Raj Kumar Makkad (Expert) 23 October 2011
I do agree with sethi.

prabhakar singh (Expert) 24 October 2011
I too agree with Mr.sethi.

Sailesh Kumar Shah (Expert) 24 October 2011
Check 2 things:-

1.that "CC" has been received by builder, if it received then no liabilty.

2. if you have paid full amount then also no need to pay tax.

Devajyoti Barman (Expert) 26 October 2011
Yes rightly advised.

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